Information Memorandum. Midland Central Property Trust. 6 March 2012

Transcription

1 Midland Central Property Trust Information Memorandum 6 March 2012 PROPERTY FUNDS LIMITED Trustee Property Nominees Pty Ltd ACN No. 1 His Majesty s Lane, Perth WA 6000 Manager Mair Property Funds Limited ACN

2 Information Memorandum Midland Central Property Trust Investment Highlights Projected distribution year one % p.a. Acquisition Price $12.4 million* Maximum gearing 50% Weighted Average Lease Term 10.3 years Three (3) Major Tenants Initial Rental Yield 8.7% p.a. Wholesale Investment Trust Target IRR 12% * Includes capex allowance of $100,000 in year 1. Midland Central Shopping Centre: Great Eastern Highway, Midland WA 3

3 IMPORTANT NOTICE This Information Memorandum ( IM ) is dated 6 March It relates to the offer of Units in the Midland Central Property Trust ( the Trust ) and is issued by Property Nominees Pty Ltd ACN ( the Trustee ) in its capacity as trustee of the Trust. The investment manager for the Trust is Mair Property Funds Limited ACN ( Manager ). No person is authorised to provide any information or to make any representation in connection with the issue of Units in the Trust which is not contained in this IM. Any information or representation not in this IM may not be relied on as having been authorised by the Trustee or any person associated with it in connection with this Offer. This IM should be read in its entirety. This IM has been prepared without taking into account your investment objectives, financial situation or needs. It is important that you read the entire IM before making a decision to invest in the Trust. This IM does not contain all the information that would be required in a product disclosure statement for a registered managed investment scheme under the Corporations Act 2001 (Cth) ( Corporations Act ). This IM does not purport to contain all the information that a potential investor may require in evaluating a possible investment in the Trust. The Trustee recommends that you conduct your own independent review and analysis of the Trust and that you seek professional advice, before deciding whether to invest in the Trust. Investments in the Trust are suitable for experienced property investors, with an awareness and understanding of the risk factors set out in Section 6 of this IM. If, after reading this IM, you have any questions about this Offer, you should contact your financial or other professional adviser without delay. The Offer is only available to investors who qualify as wholesale clients under section 761G(7) of the Corporations Act (refer to the definition of Wholesale Investor on page 39). This IM is provided to each potential investor on the condition that it is strictly confidential and is solely for the use of the potential investor and its adviser. It must not be provided to any other party without the written consent of the Trustee, which may be withheld in their absolute discretion. This IM has been prepared to the best of the knowledge and belief of the Trustee. This IM is comprised of statements of intent and opinion, many of which may or may not be realised or be accurate. The Trustee believes the information in this IM, including statements of intent and opinion, are based on reasonable assumptions. However, none of the Trustee, the Manager, their directors, officers, employees or advisers, nor any entity or person associated with them, guarantee or make any representation or warranty as to, or take responsibility for, the accuracy, reliability or completeness of this IM. Further, none of the Trustee, the Manager, their directors, officers, employees or advisers, or any entity or person associated with them, guarantees the performance of the Trust or the repayment of capital from the Trust. No obligation is imposed upon the Trustee or any of its directors, members, associates or related entities, or any other person related to the Trustee, to advise a recipient of any change to, or error in, any of the information contained in this IM. Integrated Investment Services Pty Ltd ACN AFS licence number (Integrated) has been appointed by the Trustee to arrange for the issue of Units by the Trustee to Investors pursuant to section 911A(2)(b) of the Corporations Act. Integrated s function as arranger should not be considered as an endorsement of the Offer or a recommendation of the suitability of the Offer for any Applicant. 4

4 Integrated did not prepare this IM and does not accept any responsibility for any information or errors contained in, or omissions from this IM, and has not conducted due diligence or otherwise separately verified the information contained in this IM, and makes no representation, warranty or undertaking, express or implied, as to the accuracy, completeness or suitability of the information contained in this IM. This IM is not provided to any person located in any jurisdiction where its provision would be unlawful. The distribution of this IM in jurisdictions outside Australia may be restricted by law and persons who come into possession of this IM in jurisdictions outside of Australia should seek advice on, and observe any such restrictions. An investment in the Units in the Trust is subject to investment risk. It is possible that an Investor may lose all of the money they invest in the Trust. Past performance of a property, or past track records of a trustee or manager, do not guarantee that future performance will be the same or similar. This IM contains certain forecasts and financial statements. These have been prepared by the Manager and represent the Manager s best estimates based on present circumstances. The forecasts and financial statements may involve subjective judgements and assumptions as to future events which may or may not be correct. However, the Manager considers each subjective judgement and assumption on which it has based the forecast or financial statement is reasonable, given the Manager s current state of knowledge as at the date of this IM. Nevertheless, the Trustee and the Manager cannot, and do not, guarantee the achievement of these forecasts and financial statements. Diagrams used in this IM are illustrative only and may not be drawn to scale. All references to dollars are to Australian dollars and are net of GST, unless stated otherwise. Defined words and terms used in this IM are set out in the Glossary. Photographs in this IM are of the property. 5

5 CONTENTS INVESTMENT HIGHLIGHTS... 2 IMPORTANT NOTICE... 3 CONTENTS... 5 DIRECTORY... 6 LETTER FROM THE MANAGER... 7 SECTION 1: Key Investment Features... 8 SECTION 2: The Offer SECTION 3: Property Overview SECTION 4: Investment Analysis SECTION 5: Summary Valuation Report SECTION 6: Risks & Risk Mitigation SECTION 7: Fees and Other Costs SECTION 8: Tax Information SECTION 9: Management of the Trust SECTION 10: Additional Information SECTION 11: Glossary SECTION 12: How to Invest

6 Directory Midland Central Property Trust Manager Mair Property Funds Limited ACN No. 1 His Majesty s Lane, Perth WA 6000 Phone: (08) Facsimile: (08) Website: Trustee Property Nominees Pty Ltd ACN No.1 His Majesty s Lane, Perth WA 6000 Solicitors McMahon Clarke Legal 62 Charlotte Street, Brisbane QLD 4001 Valuer CB Richard Ellis Level 2, 216 St Georges Terrace, Perth WA

7 Letter from the Manager Dear Investor, We are pleased to extend this invitation to invest in the Midland Central Property Trust. The Trust has been formed to acquire the Midland Central Shopping Centre as an income producing commercial property. The Trust will focus on providing a regular tax-effective income stream as well as potential for capital growth. The Manager considers that the current subdued property market and global economic conditions make it an ideal time to invest in well leased, strategically located real estate. As the current cycle continues to improve we expect to see income and capital growth over the term of the investment. The Trust offers investors who believe in the traditional investment principles of simplicity, transparency and investing for the long term, an opportunity to invest into main stream property assets without the hassles and responsibilities of direct ownership. As an investor, you will be represented by an experienced team of investment professionals. Wholesale investors are invited to participate in this Trust. We look forward to your participation in the Trust and remind you to read this IM in its entirety, and to seek independent advice before investing. John Mair Director Mair Property Funds Limited 8

8 1. Key Investment Features 1.1 Key Feature Table This section provides an overview of the main features of an investment in the Trust, it is not intended to be exhaustive. Prospective Investors should read the full IM to make an informed decision about whether to invest in the Trust. Feature Offer Opens Offer Closes The Trust Trustee Manager Property Description 6 March March 2012 The Trustee reserves the right to change the Closing Date without notice. Accordingly, potential Investors are encouraged to submit an Application Form as early as possible, to avoid disappointment. Midland Central Property Trust Property Nominees Pty Ltd Mair Property Funds Limited Midland Central Shopping Centre, Great Eastern Highway, Midland WA ( Property ) Note that at the date of the IM the Trustee has not signed a contract for the purchase of the property. Property Value $12.4 million (As per CBRE valuation) Target Subscription The target amount to be raised under this IM is $7,300,000. If applications for $7,300,000 are not received by the Closing Date, then the Offer will not proceed and all Application Money will be returned with interest (less any tax or bank fees as determined by the Trustee). Investment Objective Investment Strategy Application Price Eligible Investors Minimum Investment Key Risks The Trust has the following objectives: to derive regular income streams to service debt, cover the costs of maintaining the Property, operating the Trust and making distributions to Investors; and to derive capital growth from the Property. The Trust will purchase Midland Central Shopping Centre which will be held for income return and potential capital growth. The price for Units issued under this IM is $1.00 per Unit. The application price will be paid in two capital calls, the initial capital call of $0.10 per Unit is payable at the time of application, the second capital call of $0.90 per Unit is payable 14 days prior to the expected settlement date of the property purchase, 28 May An investment in the Trust is restricted to Wholesale Investors. The minimum investment in the Trust is $200,000, or such other amount as determined by the Trustee. Investors assume the risks and benefits normally associated with investment in direct property, unlisted property trusts, debt financing and the economy and markets in general. Please refer to the risks section for further information. 9

9 Feature Term of Trust Fees and Costs Trust Borrowing Income distributions Withdrawals Description The initial term of the trust will be eight (8) years from the date of settlement of the Property. Before the end of the term, the Trustee will call a meeting at which Investors can vote as to whether the Trust should be terminated or extended for an additional term of not more than five (5) years. Ongoing fees and costs are payable in relation to investments in the Trust including management fees and fees associated with the acquisition and sale of the Property. The Trust may borrow to acquire the Property. The Trust s gearing ratio post acquisition of the Property will be 50%. Investors are not parties to the loan agreement and all funding will be non-recourse to Investors. The Trustee intends to make distributions within 28 days of the end of each Quarter. There will be no withdrawal rights for Investors in the Trust. An investment in the Trust should be considered illiquid as there is no established secondary market or other redemption facility for Units in the Trust. Therefore, an investment in the Trust should be considered long term. 10

10 2. The Offer 2.1 Overview of the Trust The Trust is an unregistered managed investment scheme, structured as a unit trust. The Trust has been formed to enable Investors to gain exposure to a direct real property investment in Midland Central Shopping Centre. The Trust will not be registered with ASIC. 2.2 Who May Invest Investment in the Trust is only open to Wholesale Investors. 2.3 Amount to be raised The target amount to be raised under this IM is $7,300,000. If this amount is not raised by the Closing Date, then the Offer will not proceed and all Application Money will be returned with interest (less any tax or bank fees as determined by the Trustee). 2.4 Issue Price The issue price of each Unit will be fixed at $1.00, payable in instalments. 2.5 Application Money Potential investors must submit their Application Form by the Closing Date (23 March 2012). The Trustee reserves the right to move the Closing Date, forwards or backwards, in its absolute discretion. The initial capital call on the Units of $0.10 per Unit is payable at the time you submit your Application Form. The second and final capital call of $0.90 is payable on the date notified by the Trustee, which will be 14 days prior to the settlement of the Property. The Trustee will provide Investors with at least 14 days notice of the due date for the final capital call. Application Money can be paid by cheque (made payable to Property Nominees Pty Ltd ATF Midland Central Property Trust) or by electronic transfer to the below account. All money submitted with Application Forms will be deposited in the following trust account: Account: Property Nominees Pty Ltd ATF Midland Central Property Trust Bank: National Australia Bank BSB: Account No:

11 By signing the Application Form you agree to the subscription terms and conditions set out in section 12. Application Forms (and cheques, if applicable) are to be returned to the Trustee at the following address: Property Nominees Pty Ltd As Trustee for Midland Central Property Trust No. 1 His Majesty s Lane, Perth WA 6000 Please fax applications to the Trustee at and post the originals. Units will be issued within 14 days of the Closing Date. 2.6 Failure to Satisfy Calls If an Investor does not pay the instalment due on a partly paid Unit on or by the date specified for payment, then the Trustee may serve a notice on the Investor requesting the Investor pay the unpaid instalment, interest and costs by a further due date. If the payment is not made by that further due date specified in the notice, then the Trustee may cause the partly paid Units to be forfeited, suspend all voting rights and other entitlements and still hold the Investor liable for the outstanding amount plus interest and costs. 2.7 Term of the Trust The initial term of the Trust will be eight (8) years from the date of settlement of the Property. Before the expiry of the initial term, the Trustee will call a meeting of Investors at which Investors will have the opportunity to vote on whether or not the Trust should continue for a further term of not more than five (5) years. A special resolution is required to extend the term of the Trust meaning that at least 75 percent of the votes cast by Investors entitled to vote need to be in favour of the extension for it to proceed. If the term of the Trust is not extended, then the Trust will be wound up. 2. Withdrawals An investment in the Trust is illiquid and the Trustee does not expect that withdrawal offers will be made to Investors during the term of the Trust. There is no established secondary market for the Units. While the Trustee and the Manager can only provide limited assistance, Investors may, subject to the Constitution, sell or transfer their Units at any time. However, the Trustee does have the right to reject a transfer of Units where it is not in the interests of the Trust to do so, or if the Investor or transferee has not complied with any applicable laws. Investors should expect that their investment will remain in the Trust until the Trust is wound up. 2.9 Distributions Distributions will be paid from realised income of the Trust. The Trust may earn income in the form of rental income and interest. In the event that the Trust disposes of the Property a capital profit or loss may be derived or incurred. The Manager does not intend to pay distributions from borrowings. Given that the income and capital profit are not guaranteed, the Trust s distribution payments are dependent on the Trust s financial position at the time. 12

12 Investors should note that the distributions they receive from the Trust may vary at each distribution date. Distributions are based on the number of Units an Investor holds in the Trust in proportion to the number of Units held by all Investors and the number of days that the Investor has held Units during that distribution period. It should be noted that the Trust does not have, and does not intend to have in the near future, a distribution reinvestment plan. Distributions will be made to Investors within 28 days of the end of each Quarter. For example, if a distribution were to be made for the March Quarter, the distribution would be made on or before 28 April. All distributions will be made via electronic funds transfer or cheque. 13

13 3 Property Overview Is now a Good Time to Buy the Midland Central Shopping Centre? The Property has a number of key factors in its favour which make it a secure investment with good long term prospects for growth. Strong Tenants The Property is anchored by a Supa IGA supermarket and complemented by a Dan Murphys liquor superstore and Guardian Pharmacy. This outstanding tenancy profile gives the investment a diverse, non-discretionary retail offering (comprising food, liquor and pharmaceuticals) secured to three outstanding major retailers with strong covenants / guarantees. Long leases with income growth With a weighted average lease expiry of approximately 10.3 years (by area) and strong rental growth provisions, the centre presents a compelling proposition for the risk-averse investor; The Super IGA anchor tenancy is secured on a long term net lease (January 2022 expiry plus options) with fixed annual reviews and additional turnover rent providing income growth certainty. The Dan Murphys tenancy (Woolworths Limited) is also secured on a long term lease (January 2025 expiry plus option) and is generating strong additional income growth through its favourable percentage rent provision and strong turnover. The centre also benefits from fixed 5% annual rent uplifts from Guardian Pharmacy which is secured on a lease expiring in September Property Investment Cycle The Property is being purchased at a strong yield (8.7% per annum) which is expected to tighten as the property cycle recovers and investment demand increases. Further with interest rates expected to remain at current levels for the next 2 years the positively geared loan will provide benefit for investors. Prominent Location in Expanding Commercial Precinct The Property boasts an outstanding location in the established commercial precinct of Midland, approximately 16 kilometres northeast of the Perth Central Business District. Midland is one of eight Strategic Regional Centres in the Perth Metropolitan area, and is a key junction for many of Perth s major road and rail transport links. Above average population growth and a strategic plan by the Midland Redevelopment Authority to revitalise the area is having a positive effect and expected to increase demand and presentation in this key Regional Centre. The centre benefits from exceptional position and exposure on the southern side of the Great Eastern Highway and adjoins Victoria Street to the south, capturing high volumes of vehicular and pedestrian traffic in this centralised position. 14

14 The Property is a highly accessible, convenience based retail centre comprising three highly sought after covenants; Supa IGA, Dan Murphys and Guardian Pharmacy. Guardian Pharmacy and Dan Murphys are located on the Northern portion of the site, featuring excellent exposure to the busy Great Eastern Highway. The Supa IGA tenancy is positioned to the south and benefits from a large frontage to Victoria Street. Great Eastern Highway Carpark Carpark Victoria Street 15

15 EXECUTIVE SUMMARY Property Snapshot Property Type: Convenience Retail Site Area 7,993 Lettable Area (sqm): 3,220 Zoning (main centre): Weighted Average Lease Expiry: Midland Redevelopment Area 10.3 years Parking Spaces: 132 Constructed: 1987 Net Passing Income ($pa): $1,080,265 Fully Leased Net Income ($pa): $1,080,265 Outgoings ($ per sqm): $65 Location Midland Central Shopping Centre is situated approximately 16 kilometres northeast of the Perth CBD. The locality is easily accessible by major arterial road access to the CBD via the Graham Farmer Freeway and Great Eastern Highway. The centre benefits from an exceptional position on the southern side of the Great Eastern Highway and adjoins Victoria Street to the south, capturing high volumes of vehicular and pedestrian traffic. Description The property is currently improved with three freestanding buildings occupied by Supa IGA, Dan Murphys and Guardian Pharmacy with a centralised parking area. The site benefits from strong exposure and excellent access from the Great Eastern Highway. Tenancy Profile Category Area (sqm) Gross Rent (%) Area (%) Supa IGA 1,891 47% 59% Dan Murphy % 27% Guardian Pharmacy % 14% Total 3, % 100% 16

16 Income Summary Income As at Feb 2012 Base Rent ($pa) $ 975,937 Outgoings ($pa) $ 148,908 Other Income ($pa) $ 165,508 Total Income $1,290,353 Expenditure Statutory Expenses ($pa) $ 116,221 Operating Expenses ($pa) $ 93,867 Total Expenditure $ 210,088 Net Income (Passing) $1,080,265 Net Income (Fully Leased) $1,080,265 ZONING The Property is zoned Midland Redevelopment Area City Centre under the Local Planning Scheme No. 17. The Midland Redevelopment Area was established in order to manage and enhance the residential, commercial and retail development of the area earmarked as the key town centre. Some of the key objectives identified in the Midland Redevelopment Scheme (April 2005) are outlined below highlighting the ongoing transformation of the area and the potential benefits for the subject property: (a) (b) (c) (d) (e) (f) (g) (h) To assist in the revitalisation of Midland as an effective strategic regional centre; Create diversity of land use and development which contributes to a range of enhanced employment and residential opportunities in Midland; Create development which respects and builds upon the existing fabric of Midland and its community; Ensure the proper integration of development with adjoining areas; Encourage the progressive replacement of inappropriate uses and development; Contribute to a safe and comfortable environment for all people; Create visually attractive development, with appropriately scaled streetscapes and other elements, providing a diverse but unified urban townscape characterised by high quality urban design; and Manage the redevelopment of the redevelopment area to achieve sustainable outcomes through simultaneous environmental, social and economic improvement. 17

17 MAJOR TENANT LEASE SUMMARY The Property features three highly sought after lease covenants that are ideally suited to the convenience and non-discretionary based nature of the centre. The centre is underpinned by long leases on predominantly net terms and with strong growth prospects through structured rent reviews and potential percentage rent uplift from Dan Murphys. Supa IGA Head Lessee Action Supermarkets Pty Ltd (Metcash Trading Limited) Lease Start 12 January 2007 Lease End 11 January 2022 Term 15 years Option 10 years + 5 years Current Base Rent $423,228 per annum Next Review 12 January 2013 Rental Reviews 3.0% per annum Turnover Rent 2% of turnover in excess of a threshold which increases on each Rent Review Date by the same percentage as the annual fixed review (commenced at $20,644,000) Outgoings All recoverable from the lessee Note This tenancy has been sub-leased by Action Supermarkets Pty Ltd on the same terms as the head lease terms as the head lease to their franchisee. Guarantee The tenants obligations are guaranteed by IGA Distribution Pty Ltd which is a subsidiary of Metcash Trading Limited. Dan Murphys Lessee Woolworths Limited Lease Start 2 January 2010 Lease End 1 January 2025 Term 15 years Option 10 years Current Base Rent $360,000 per annum Next Review 2 January 2015 Turnover Rent 3% of turnover in excess of a breakeven threshold up to $14.40 million together with 2.25% of turnover in excess of $14.40 million. Rental Reviews Base rent reviews occur every five years and are calculated as the average of the Base Rental and the turnover rental for the previous three years Outgoings Payable by the Lessor (gross lease) 18

18 Guardian Pharmacy Head Lessee Optimal Systems Australia Pty Ltd Lease Start 21 September 2009 Lease End 20 September 2019 Term 10 years Option 5 years Current Base Rent $192,709 per annum Next Review 21 September 2012 Rental Reviews 5.0% per annum Outgoings All recoverable from the Lessee, with the exception of the management fee and 50% of audit fee Notes This tenancy has been subleased to Peter Zaninovich Guarantee: The lease is guaranteed by the directors of Optimal Systems Australia Pty Ltd. Valuation Policy Under the Constitution, the Trustee may cause the Property to be valued at any time. The Manager and the Trustee currently intend to value the Property once every 3 years using a registered valuer, independent of the Trust, who complies with the industry standards and codes. In all other circumstances, the Manager will determine the value of the Property at its discretion which must be consistent with ordinary commercial practice for valuing property of the relevant kind. A summary of valuation completed by CBRE is included as part of this IM (see section 5). 19

19 4. Investment Analysis This section of the IM provides details about the following: Source and applications of funds. Financial forecast for the Trust. Tax information. Borrowings of the Trust In preparing this information the Manager and Trustee have made a number of assumptions which are detailed below. All financial information has been prepared on the basis the Trust will report on financial years ending 30 June. Table 1 - Proposed Funding Funding for the Property to be purchased by the Trust will be sourced and applied as follows: Sources and Application of Funds $ Sources of Funds Equity from Investors 7,300,000 Existing Cash Nil Loan From Financier 6,200,000 Total Funds 13,500,000 Application of Funds Contract purchase price 12,300,000 Capital Expenditure in 1st year 100,000 Property acquisition 12,400,000 Stamp duty on land acquisition 632,515 Property acquisition fee 307,500 Owners Reserve 25,985 Due diligence, settlement costs, marketing, publication of IM expenses and consultant s costs 134,000 Total - Application of Funds 13,500,000 The above table represents total equity raised of 50% of the valuation of the Property plus acquisition and establishment costs and is provided as a guide only. Should the final level of equity raised be higher then there will be some amendment to the various numbers. 20

20 4.1 Returns to Investors Returns to Investors are illustrated below on the basis of estimated net income from the Property. The estimated annualised return to Investors for the first 5 years from 1 June 2012 is expected to be as follows: Cash Flow Projections Year 2012/ / / / /17 Rental Income (net of Outgoings) $1,080,265 $1,128,877 $1,179,676 $1,232,762 $1,288,236 Deduct Compliance Costs $15,000 $15,375 $15,759 $16,153 $16,557 Property and Syndicate Management* $22,000 $53,300 $54,633 $55,999 $57,398 Owner Outgoings $8,000 $8,200 $8,405 $8,615 $8,831 Sub Total ($45,000) ($76,875) ($78,797) ($80,767) ($82,786) Net Cash Flow before Interest $1,035,265 $1,052,002 $1,100,879 $1,151,995 $1,205,450 Anticipated Borrowing Costs (7%) # $434,000 $441,000 $448,000 $448,000 $448,000 Net Cash Flow after borrowings Equity invested (net of cash reserve) $601,265 $611,002 $652,879 $703,995 $757,450 $7,276,515 $7,276,515 $7,276,515 $7,276,515 $7,276,515 Return on Equity 8.26% 8.40% 8.97% 9.67% 10.41% Notes: * The cost associated with the professional services, legal costs, accounting fees, audit and Trust management fees includes a reduction of $30,000 management fees in year 1. # It is very important to note that, for the purpose of these forecasts, the manager has assumed an interest rate of 7%. It is highly likely that interest rates will move during the forecast period and if they rise above the assumed 7% per annum, the return on equity and therefore distributions to investors may be adversely affected. 4.2 Income Tax The taxation status of the Trust and details of the Divisions of the Income Tax Assessment Act 1936 ( ITAA ) as noted below, are explained under the heading Tax Information in this section of the IM. If Division 6 of Part III of the ITAA applies, the Trustee will not be liable to pay income tax if the Investors are presently entitled to all of the income of the Trust. The Trustee intends to distribute income (if any) of the Trust, less expenses, to Investors in accordance with the Constitution. However, the Trustee will be liable for income tax if Division 6C of Part III of the ITAA applies and the Trust is taxed as a company, or if Division 6 of Part III of the ITAA applies and for any reasons the Trustee does not distribute all of the Trust s income. 21

21 If the Trustee is liable for income tax, the charge for current income tax expense is based on the profit for the year adjusted for any non assessable or disallowed items. It is calculated using the tax rates that have been enacted or are substantially enacted by the balance date. Deferred tax is accounted for using the balance sheet liability method in respect of temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. No deferred income tax will be recognised from the initial recognition of an asset or liability where there is no effect on accounting or taxable profit or loss. Deferred tax is calculated at the tax rates that are expected to apply to the period when the asset is realised or liability is settled. Deferred tax is credited in the income statement except where it relates to items that may be credited directly to equity, in which case the deferred tax is adjusted directly against equity. Deferred income tax assets are recognised to the extent that it is probable that future tax profits will be available against which deductible temporary differences can be utilised. 4.3 Borrowings of the Trust The Manager has received a letter of offer for a loan facility with a major Australian bank to provide funding to the Trust on an interest only basis. Summary of Loan Terms The major conditions of the loan facility will be as follows: Facility limit of $6,200,000. Secured by way of a registered first mortgage over the Property and general security agreement over the Assets. Interest only loan with a variable interest rate of BBSY plus a margin of 2.35%. At the date of this IM the base BBSY (90 days) was 4.55%. Gearing target not to exceed 50% loan to value ratio. An interest cover ratio of at least 2 times is required to be maintained. On drawdown of the loan, it is anticipated that the interest cover ratio will be 2.4 and therefore above the minimum requirement. A term of 3 years to 1 June Investors are not parties to the loan arrangement. The Trustee will borrow funds under a non-recourse loan which means the financier will only have recourse to the Assets of the Trust. It should be noted that amounts owing to lenders and creditors of the Trust rank ahead of an Investor s interest in the Trust. Loan Repayment The principal of the loan facility is expected to be refinanced at the end of the loan facility or rolled over for a further agreed period. 22

22 5. Summary Valuation Report V A L U A T I O N & A D V I S O R Y S E R V I C E S CBRE Valuations Pty Limited Real Estate Agent ABN February 2012 The Director Property Nominees Pty Ltd as trustee of the Midland Central Property Trust 1 His Majesty s Lane Perth WA 6000 Level 2, 216 St George s Terrace Perth WA 6000 T F Dear Sir, Midland Central Shopping Centre, Great Eastern Highway, Midland Instructions At your request, CBRE Valuations Pty Limited (CBRE) has prepared this letter summarising the valuation results from our completed, self contained valuation report. The purpose of our report was to render our opinion of market value of the above property as at 9 February The property was inspected 9 February The value conclusion is subject to the assumptions and limiting conditions contained in the report and reflects all information known and is based upon the most current information available at the time that the valuation was prepared. CBRE accepts no responsibility for subsequent changes in information as to income, expenses or market conditions. Any subsequent change in lease terms or the terms of the proposed income will also have a corresponding change to the value. Reliance on this Letter We have prepared this letter summarising our report and which outlines key factors that have been considered in arriving at our opinions of value. This letter alone does not contain all of the data and support which is included in our report. For further information, we recommend the reader review the contents of the complete, self-contained report, which can be obtained from the investment manager Mair Property Funds Ltd. CBRE has provided Property Nominees Pty Ltd as trustee of the Midland Central Property Trust with a valuation of the property. The valuation is not a guarantee or prediction of the future performance of the property. Brief Description of the Property The property comprises three freestanding buildings which were constructed circa the 1970's. The two buildings accommodating the Super IGA and Dan Murphy tenancies are located along the western alignment of the property with the third building accommodating the Guardian Pharmacy being situated in the north eastern corner of the site. On site car parking is provided for approximately 132 vehicles (including 3 disabled bays).

23 V A L U A T I O N & A D V I S O R Y S E R V I C E S 9 February 2012 The property is situated between Great Eastern Highway along the northern alignment and Victoria Street along the southern alignment. The site comprises 7,993 sqm of land, together with a total building area of 3,220 sqm. Access to individual retail tenancies is considered easy and direct, with all shops facing the car park and receiving good exposure to passing traffic. Additionally the Super IGA tenancy maintains street visibility along Victoria Street with both Dan Murphy s and the Guardian Pharmacy being highly visible along Great Eastern Highway. The layout of the centre is considered to be logical and a good level of visibility is maintained throughout. We have perused all three major tenant leases and based on our interpretation of these tenancy arrangements, the estimated income derived from the subject property, is calculated as follows. Tenant Area Base Rent Outgoings % Rent Gross Rent sqm $pa $pa $pa $pa $psm Majors Super IGA 1, , , , Dan Murphy , , , Guardian Pharmacy ,709 25, , Majors 3, , , ,508 1,290, GROSS PASSING RENT 3, , , ,508 1,290, Other Income (including electricity profit) - GROSS INCOME 1,290,353 Less Statutory Expenses (incl. land tax) (116,221) Operating Expenses (93,867) Total Non-Recoverable Expenses - (210,088) NET PASSING INCOME 1,080, Vacant Tenancies - - Vacancy/Bad Debts Allowance (specialties only) - - NET INCOME (Fully Leased) 3, ,080, Valuation Rationale The two primary valuation approaches which we have adopted in valuing the subject property include the capitalisation of market net income and a discounted cashflow approach. The capitalisation approach involves assessing the market net income of the property and capitalising this at a market derived rate. In determining an appropriate yield for the subject property we have considered a range of sales evidence for comparable shopping centres and retail properties across the Perth metropolitan area. Having reviewed this evidence we believe the appropriate capitalisation rate for the subject property is likely to be in the order of 8.50% on the assessed market rental value on the basis of: Weighted average lease term is strong at 10.7 years (by income) and 10.4 years (by area). Fully leased retail complex. Well located within Midland with major street frontage to both Victoria Street and Great Eastern Highway. Good anchor tenants, Super IGA (Metcash Group) and Dan Murphy (Woolworths Limited). Strong competition from Centrepoint and Midland Gate Shopping Centres. Future capital expenditure. The centre has a good car park ratio. Midland is a tourism precinct with Centrepoint and Midland Gate Supermarkets trading late nights and most tenancies open Sundays _IM.doc Page 2

24 V A L U A T I O N & A D V I S O R Y S E R V I C E S Capitalisation Approach - Midland Central Shopping Centre 9 February 2012 Area Base Outgoings % Rent Total Income Super IGA 1, , , ,606 Dan Murphy , , ,508 Guardian Pharmacy ,709 25, ,239 Total 3, , , ,508 GROSS PASSING RENTAL 1,290,353 Other Income Storage Income - Casual Leasing Income - Telecommunications Facility Income - Extended Trading Hours - Sundry Recoveries - Car Parking Income - Sundry & Other Income - - GROSS PASSING INCOME 1,290,353 Outgoings Statutory Expenses (including land tax): (116,221) Operating Expenses: (93,867) Non-Recoverable Outgoings: - (210,088) NET PASSING INCOME 1,080,265 Income Adjustments Potential Future Income - Vacant Tenancies - Vacancy/Bad Debts Allowance - - FULLY LEASED NET INCOME (After vacancy allowance) 1,080,265 CAPITALISED VALUE Capitalise In 8.50% 12,709,002 Capital Adjustments Vacant Tenancies - Letting Up Allowance - Vacant Tenancies - Agents Commissions - Vacant Tenancies - Incentive Allowance - Unexpired Tenant Incentives: - Rental Shortfall - New Tenancies: - Present Value of Capitalised Rental Reversions 24 mths - Electricity Profit 20%) - - Present Value of Future Letting Up Allowances 2 years - Present Value of Future Leasing Commissions 2 years - Present Value of Future Incentive Allowances 2 years - Present Value of Capital Expenditure 3 years (283,465) Present Value of Refurbishment Allowance 2 years - (283,465) Sensitivity Analysis 12,425, % 12,800,000 Adopt 8.50% 12,430,000 12,430, % 12,100,000 In addition to the capitalisation approach, we have also adopted a discounted cashflow approach over a 10 year time frame, using a target or preselected discount rate. From our analysis of comparable investment sales, we consider an appropriate discount rate for the subject property to be 10.50%. When applied to the forecast cashflow of the property the discounted cashflow approach discloses a value of $12,370,000. Valuation Summary Valuation Reconciliation Capitalisation Approach: Assessed Value: 12,430,000 Capitalisation Rate: 8.50% Discounted Cash Flow Approach: Assessed Value: 12,370,000 Target IRR: 10.50% Terminal Yield 9.00% ADOPTED VALUE 12,400,000 Initial Yield: 8.71% Indicated IRR: 10.46% Capital Value Rate ($psm): 3, _IM.doc Page 3

25 V A L U A T I O N & A D V I S O R Y S E R V I C E S 9 February 2012 Consent CBRE provides consent for the inclusion of this summary letter within the Information Memorandum for the Trust subject to the Trustee making recipients of the Information Memorandum aware of the following liability disclaimers. Liability Disclaimer (a) CBRE is not operating under an Australian Financial Services License when providing the formal valuation or this letter, and those documents do not constitute financial product advice. Investors should consider obtaining independent advice from their financial advisor before making any decision to invest with Mair Property Funds Ltd. (b) CBRE disclaims any liability to any person in the event of an omission from, or false and misleading statements included in the Information Memorandum, other than in respect to this letter and the formal valuation. (c) The formal valuation and this letter are strictly limited to the matters contained within those documents, and are not to be read as extending, by implication or otherwise, to any other matter in the Information Memorandum. Without limitation to the above, no liability is accepted for any loss, harm, cost or damage (including special, consequential or economic harm or loss) suffered as a consequence of fluctuations in the real estate market subsequent to the date of valuation. (d) Neither this letter nor the full valuation report may be reproduced in whole or in part without prior written approval of CBRE. (e) CBRE charges a professional fee for producing valuation reports, and the fee paid to CBRE by the Trustee for the formal valuation report was $6,750 exclusive of GST. (f) CBRE has prepared this letter on the basis of, and limited to, the financial and other information (including market information and third party information) is accurate, reliable and complete and confirm that we have not tested the information in that respect. (g) This summary letter is to be read in conjunction with our formal valuation report dated 9 February 2012 and is subject to the assumptions, limitations and disclaimers contained therein. We refer the reader to Mair Property Funds Ltd to obtain a copy of the full report. (h) We confirm that the valuer does not have a pecuniary interest that would conflict with a proper valuation of the property. Yours sincerely CBRE Valuations Pty Limited Jason Fenner AAPI Licensed Valuer No Certified Practicing Valuer (CPV) Director Valuations & Advisory Services _IM.doc Page 4

26 6. Risks and Risk Mitigation All investments involve varying degrees of risk. You should be aware that some risks and their consequences are outside the control of the Manager and Trustee. Furthermore, not all risks can be foreseen. Neither the Manager, nor the Trustee guarantee the performance of the Trust or the repayment of Investors capital. Whilst there are many factors which may impact on the performance of an investment, the summary below details some of the major risks that Investors should be aware of when considering whether to invest in the Trust. The following list is not exhaustive and Investors should read this IM in full. Investors should obtain professional advice regarding the suitability of the investment in the Trust having regard to their individual circumstances including their investment objectives, financial situation and needs. 6.1 General Property Risks The investment objective of the Trust is to acquire the Property to produce returns for Investors. When acquiring the property, the Trust assumes the risks associated with the direct ownership of the Property. Investors are indirectly exposed to these risks through their holding of Units in the Trust, to the extent of their holdings. The risks associated with the direct ownership of a property investment include that the value of the Property may be affected by: the supply and demand for property based investments, which can be influenced by general economic conditions including inflation, interest rates, exchange rates, changes in legislation (or its interpretation); the attractiveness of the Property reducing compared to other investment opportunities; and competition from new property developments or from refurbishment to existing properties or both. The value of the Property may decrease depending on the above factors. There is a risk that the Property will not be sold for a price which delivers a capital gain to Investors. There is also the risk that valuations of the Property may not be accurate or may not be realised. Returns to Investors may be impacted by the need for unforseen property capital expenditure over the life of the Trust. 6.2 Property Leasing Risks The Property is leased to tenants. The income of the Trust will be influenced by factors such as tenancy occupancy levels, rental rates paid by tenants and tenancy default. 27

27 Each tenant and its business will be influenced by a wide range of business and economic factors. Such factors may affect the ability of a tenant to continue in business or pay rent due to the Trust. Tenant occupancy levels within the Property may change as a result of changing general economic conditions. Areas in the Property may become vacant and available for lease within the maximum term of the Trust. There is no guarantee that new tenants will be readily found for these new vacant areas. The ability of the Trust to obtain new tenants may be influenced by any leasing incentives granted to prospective tenants and increased competition, which may increase the time required to lease these new vacant areas. Whilst the leases impose legally enforceable obligations on a tenant, it is possible for a tenant to default on their obligation to pay rent to the Trust or default in other obligations, leading to a reduction in the operating income of the Trust and the Trust incurring costs in enforcement proceedings and, if necessary, the re-leasing of the tenancy. 6.3 Insurance Risks The Property may be damaged or destroyed as a result of fire, storm, malicious damage, earthquake or other natural causes. Losses to the Trust from such damage or destruction will be covered by insurance, where this is feasible. The extent of the insurance coverage available is subject to the specific terms, conditions and inclusions of the insurance policy entered into by the Trustee on behalf of the Trust. 6.4 Financial Risks At the end of the term of any loan facility of the Trust, the loan facility may have to be renegotiated at interest rates which prevail at that time. If interest rates are higher, then this will reduce the funds available to distribute to Investors. There is no obligation on an initial lender to refinance a loan facility at the end of the initial term of the loan facility. If the Manager is unable to refinance the loan facility, then Trust property may have to be sold. If the Trust defaults on its loan at any time, then the lender may exercise its security and sell Trust property to recover the loan amount and cannot be impeded by any Investor in doing so. Borrowing to fund the costs of owning property has the effect of accentuating any gains and losses. That is, if the property increases in value, then Investors should receive an even higher percentage increase in the value of their capital invested. However, if the property decreases in value, borrowing also accentuates the potential losses. If the value of the Property falls such that the size of the loan exceeds the lenders approved loan to valuation ratio, then the lender may demand part of the loan to be repaid to the extent necessary to restore the ratio to the required level. This may require that distributions be held back, or additional debt or equity capital be raised. In either case, it is likely that returns to Investors would be reduced or suspended. The Trustee will only consider fixing the Trust s interest rate exposure if it is cost effective to do so and in the best interests of Investors. While interest rates are variable, the funds available for distributions may decrease if interest rates rise. 28

28 6.5 General Risks An investment in the Trust should be considered as illiquid as there is no obligation on either the Manager or the Trustee to redeem or arrange for a sale of Units. However, Units can be bought and sold by willing parties with the approval of the Trustee. Changes in Government legislation and policy or its interpretation (e.g.: taxation affecting property transactions and trust distributions) may affect the performance of the Trust and the relative attractiveness of investing in it. Naturally, the implications of this new legislation can only be assessed if and when it is introduced. In respect to carry forward tax losses, the ability of the Trust to offset losses against future taxable income is subject to the application of complex loss recoupment rules which could prevent the Trust from utilising its carry forward tax losses. These rules are generally assessed at the time of recoupment. There is also a risk that investing in the Trust may give different results than investing individually because of income or capital gains tax accrued in the Trust and the consequences of investment by other Investors. 6.6 Potential Consequences It is not possible to predict what future events may or may not occur and so the risks in this section should not be considered exhaustive. Generally speaking, if one or more of the risks outlined above comes to pass, then it could result in one or more of the following outcomes: Distributions to Investors may not be made or may be reduced. The capital value of the Property may decline which may result in the Trust borrowings being reviewed. The Trust may need to raise additional debt or equity capital to meet its financial obligations. If the Trust is unable to raise additional capital or debt, then Trust property may have to be sold and Investors may not fully recover their initial investment. 29

29 7. Fees and other costs 7.1 Fees and Costs This table shows fees and other costs that apply to an investment in the Trust. These fees and costs may be deducted from the Assets. Information about taxes is set out in section 8 of this IM. All fees and costs are exclusive of GST. You should read all the information about fees and costs because it is important to understand their impact on your investment. Type of fee or cost Amount How & when paid Property and trust management fee Property acquisition fee Leasing fee Asset disposal fee Project management fee Trust management performance fee 4% per annum of the gross collections from the Assets (for example, rental and other income). A reduction of $30,000 will be made from the Manager in year % of the purchase price of the Property. 12% of the gross collections (for example, rental and other income) for the first year of a new or extended term of a lease over the Property 2% of the sale price of the Property. The Manager will pay any agent commissions from this fee. Maximum of 5% of any major capital project managed by the Manager but including any other project managers fees which must be part of this fee. 20% of the outperformance over the benchmark return, being an IRR of 12% per annum Payable out of the Assets to the Manager monthly in arrears. Payable out of the Assets to the Manager on the date of completion of the purchase of the Property. Payable out of the Assets to the Manager within 30 days after the earlier of the tenant taking possession or the new lease or extension agreement being entered (as the case may be) Payable out of the Assets to the Manager on the date of completion of the sale of the Property. Payable out of the Assets to the Manager when invoiced to the Trust. Payable out of the Assets to the Manager within 14 days after the realisation of the Assets Trust termination fee 0.5% of the value of the Assets Payable out of the Assets to the Manager within 14 days of termination of the Trust Trustee removal fee 1% of the gross value of the Assets Payable if Property Nominees Pty Ltd is removed as trustee of the Trust out of the Assets to the Trustee on the day before the removal is effective. 30

30 7.2 Additional Explanation of Fees and Costs (a) Property and Trust Management Fee The Manager is entitled to an ongoing property and trust management fee equal to 4% per annum of all money received from the tenants, licensees and other occupants and users of the Property (including, for example, rent, fees and outgoings) and all other revenue generated by, or in respect of, the use of the Property. This fee is payable monthly in arrears from the Assets. The Trustee is also entitled to an ongoing management fee of $4,000 per annum plus GST for its services. This fee will be paid by the Manager from its own funds. (b) Property Acquisition Fee In consideration of the Manager s services in identifying, negotiating and settling the purchase of the Property the Manager is entitled to a fee equal to 2.5% of the purchase price of the Property. (c) Leasing Fee Upon the grant of a new lease or licence or an extension of an existing lease or licence of premises that form part of the Property, the Manager is entitled to a fee of 12% of all money received (including, for example, rent, licence fees and outgoings) under the new or extended lease or licence for the first year. In calculating the amount of money received, if the first year contains a rent free or reduced rent period, then the calculation of the money received will include the amount of rent which would have been payable but for the rent free or rent reduced period. (d) Asset Disposal Fee The Manager is entitled to an asset disposal fee of up to 2% of the sale price (excluding GST) of the Property. (e) Project Management Fee This fee is for the arrangement and supervision of works on properties and property developments undertaken by the trust. (f) Trust Termination Fee Upon termination of the Trust, the Manager is entitled to a Trust termination fee of 0.5% of the value of the Assets as determined by an independent valuer. (g) Trust Management Performance Fee This is the fee payable in consideration for the past and successful management of the Trust. The fee is only payable to the extent the returns generated by the Trust exceeds the benchmark return at the termination of the Trust. If payable, the fee is 20% of the outperformance over the benchmark return. The benchmark return is the total amount of money which, as at the date of calculation of the fee, the Trust would have to distribute to Investors in order to provide each Investor with a pretaxation internal rate of return of 12% (compounded annually) on the funds paid up by them to invest in the Trust. 31

31 (h) Trustee Removal Fee If Property Nominees Pty Ltd is removed as trustee of the Trust, Property Nominees Pty Ltd is entitled to a removal fee of 1% of the gross value of the Assets. This fee will not be payable to any entity that replaces Property Nominees Pty Ltd as trustee of the Trust. (i) Adviser Remuneration The Manager may pay financial planners or advisers commission that will be negotiated between the Manager and the financial planner or adviser. This fee will not exceed 2% of an Investor s Application Money. The commission is payable by the Manager from its own funds. It is not deducted from the Application Money. The adviser may rebate this commission to the Investor. Investors may also enter into their own agreements with financial planners or advisers under which the advisers are paid fees for financial advice. (j) Fees waiver The Constitution allow the Trustee to collect the fees described in the fee table. The Trustee waives its entitlement to those fees to the extent they are paid to the Manager. (k) Other Expenses In addition to the above fees, certain costs involved in the administration and operation of the Trust are payable by the Trust. The Trust is responsible for the costs and expenses incurred in connection with the acquisition and disposal of the Property, costs or expenses incurred in connection with any legal proceedings or other claims brought by or against it, all borrowings on behalf of the Trust and other liabilities of the Trust and other costs or expenses in connection with the management of the Trust or the proper performance of the Trustee s duties under the Constitution. (l) Goods and services tax (GST) Unless otherwise indicated, all fees stated in this IM are exclusive of GST. Where GST is payable in relation to a fee or expense and an input tax credit is available from the tax office, then the Trust will be credited with the amount of the input tax credit. A full input tax credit may not be available on some fees or expenses. If not, then a reduced input tax credit of 75% of the GST charged to the Trust will be available. 32

32 8. Tax Information General This section provides a summary of the Australian income tax considerations for the Trust and Investors. The information is both general in nature and a brief guide only as the tax implications will depend on the taxation status of the Trust and each Investor s circumstances. In particular, this information only relates to Australian Investors, as the Trust is not open for investment in any other jurisdiction. The Trustee believes that the current taxation status of the Trust is that it will be taxed as a fixed trust. The tax status of the Trust could also change over time. The Trustee will inform Investors if the taxation status of the Trust changes. Investors are advised to seek their own tax advice in relation to an investment in the Trust. Taxation Status The Trust is a fixed unit trust. Therefore, if the Trust is not classified for taxation purposes as a public trading trust, the Trust will be taxed on a flow through basis under Division 6 of Part III of the ITAA. Alternatively, if the Trust is classified as a public trading trust, the Trust will be taxed as a company under Division 6C of the ITAA. A public trading trust is a public unit trust that is also a trading trust. Public Unit Trust The Trust could be classified as a public unit trust if: 1. the units in the Trust are being offered to the public; or 2. the units may be held by 50 or more Investors; or 3. a tax-exempt entity (e.g. government agency, exempt life assurance fund etc), or a complying superannuation fund, a complying approved deposit fund or a pooled superannuation trust, may hold between them beneficial interests in 20% or more of the property or income of the Trust, or during the income year concerned are paid 20% or more of the moneys paid by the Trust to Investors or an arrangement exists whereby such entities could be given such a holding during the year or could be entitled to 20% or more of any moneys paid to Investors during the year concerned. Exclusion The Trust will not be treated as a public unit trust under points 1 and 2 above if it is closely held and point 3 does not apply. The Trust will be closely held if 20 or fewer Investors have, between them, fixed entitlements to at least 75% of the income or capital of the Trust. If the Trust is classified as a public unit trust, then the Trust will be taxed as a company if it is also a trading trust. 33

33 Trading Trust The Trust will be a trading trust if it carries on a trading business. A trading business is any business that does not consist wholly or primarily of an eligible investment business. An eligible investment business includes an investment in land for the purpose, or primarily for the purpose, of deriving rent. In this regard the Trust may develop a property, for the purpose, or primarily for the purpose of deriving rent. This may be an eligible investment business. An investment in land other than for the sole or primary purpose of deriving rent is not an eligible investment business. This would include the subdivision of a property or the development of a property for resale, by the Trust. Distributions The Trust may earn income in the form of rental income and interest. In the event that the Trust disposes of the Property, a capital profit or loss may be derived, which, depending on the investment strategy pursued by the Trust, could be assessable to the Trust as either ordinary income or as a capital gain. The comments in this part assume that an Investor is an Australian resident taxpayer and is an individual, company or complying superannuation fund which holds its investment in the Trust on capital account. If the Trust is taxed on a flow through basis under Division 6 of Part III of the ITAA, Investors will be taxed on their proportional share of the taxable income derived by the Trust. The taxable income will retain its character in the hands of the Investor and is taxed at the respective rates applicable to each Investor. Any tax deferred (non-assessable) distribution will also flow through to the Investors and will be applied to reduce an Investor s cost base in the Units. Investors will be subject to tax on the tax deferred (nonassessable) distribution, to the extent that the non-assessable amount exceeds the cost base of the Units. Individual and trust Investors may be entitled to a 50% exemption from capital gains tax arising if they have held their Units for more than 12 months. Superannuation funds may receive a one-third exemption. No exemption is available to a company. If Division 6C of the ITAA applies to the Trust, the Trust is taxed as a company and therefore distributions are made on an after tax basis. Each Investor will be required to include the cash amount of any distributions paid by the Trust, plus the attached franking credit (if any), in their assessable income. A tax offset equal to the franking credit may be available to offset the tax otherwise payable on the Investor s taxable income. An individual or a complying superannuation fund will be entitled to a tax refund to the extent that the tax offsets exceed the total tax payable on their taxable income. A company may be able to convert any such excess into an equivalent grossed-up tax loss available to be carried forward and will also obtain a franking credit in its franking account for the full amount of the franking credit attributable to the Trust distribution. Disposal of Units in the Trust Investors who are individuals or the trustee of a trust may be entitled to a 50% exemption from capital gains tax arising from the sale of their Units providing they have held their Units for more than 12 months. Superannuation funds may receive a one-third exemption. No exemption is available to a company. 34

34 Tax File Number The Application Form requests that Investors supply their TFN. If a TFN is not supplied, or appropriate TFN exemption information is not provided, income tax is required to be deducted from Trust distributions at the highest marginal rate plus the Medicare levy, currently 46.5%. The Trustee will not accept Applications that are not fully completed including the provision of a TFN. 35

35 9. Management of the Trust Trustee: Property Nominees Pty Ltd Property Nominees Pty Ltd is the trustee of the Trust and will hold the land on behalf of the Trust. John Mair is the sole director of Property Nominees Pty Ltd. Property Nominees Pty Ltd has appointed Mair Property Funds Ltd as the investment manger of the Trust. Investment Manager: Mair Property Funds Ltd Mair Property Funds Limited is an unlisted public company formed in The Manager s registered office is at No. 1 His Majesty s Lane, Perth, Western Australia. The Manager is committed to providing Investors with a high level of service and regular reporting. Investors are invited to contact the Manager with any questions regarding their investment in the Trust: Telephone: Facsimile: Website: mair@mair.com.au Post: No. 1 His Majesty s Lane, Perth WA 6000 Our hours are 8:30am to 5:00pm (Perth time) on Business Days. Structure Chart Investment Manager Management Agreement Trustee (Special Purpose Pty Ltd Company) Intermediary Agreement AFS Licensee Trust Constitution Bank Debt Charge Unit Trust Equity ($) Units Unit Holders (Excluded Offer) Mortgage Property 36

36 Keeping you Informed The Manager will: Confirm every transaction you make, remit your return from surplus funds and provide you with an annual statement outlining the performance of the Trust. Within three months of each financial year end, send you a statement to help you with your tax return. Notify you of any material changes to this IM and any other significant event. The Manager s key personnel have significant experience in the acquisition, management and disposal of commercial property and the establishment and operation of unlisted property schemes. The Manager has been appointed by the Trustee to manage the Trust. The Trustee is responsible for the operation of the Trust and it will closely monitor the Manager in relation to all other Trust management functions. The Manager s Board John Christian Mair (Director): Established the real estate business known as Mair & Co in John has specialised in property investment, development and management. Since 1966 John has been involved with the establishment of over 35 private syndicates and unit trusts to develop and/ or invest in property. John has held a Real Estate and Business Agent s Licence in Western Australia for over 30 years and holds an Auctioneer s Licence. John is a member of the Real Estate Institute of Western Australia. Guy David Tristram (Director): Has been a director of the real estate business known as Mair & Co since 1983 and his primary involvement is the running of and responsibility for all property management. Guy s responsibilities as Director of Property Management for Mair & Co include all aspects of trust accounting and property management, including property management of those syndicate and trust investments administered by Mair & Co. Guy was educated in New Zealand and completed further studies at TAFE in Western Australia to a certificate in property management level. Elizabeth Alice Mair (Director): Has a Master of Arts degree from the University of Western Australia. Elizabeth is a private property investor and has extensive property experience. Saundra Weeratunge (Company Secretary): Has been the company secretary of the Mair Group since August Saundra is responsible for all accounting and financial matters and is also the compliance officer. She is a CPA (Australia), ACMA (Cost and Management Accountant, UK), ACIS (Chartered Secretaries, Australia) and holds a Graduate Certificate of Business (Professional Accounting) from Edith Cowan University, Western Australia. General Manager David Ellwood is an experienced professional in the real estate investment Industry. David has held many senior management positions with major real estate companies, fund managers and large corporate investors. Over his 25 working years he has lead many investment projects and successfully completed a long list of property transactions. He holds a Bachelor of Science Degree and is a Certified Asset Manager (Property Council). 37

37 10. Additional Information 10.1 Related party transactions The Manager is related to the Trustee as John Mair is a director of both companies. The Trustee may also engage other related parties to provide services to the Trust in the future. Any engagement with such related parties will specify what the related party must deliver under the agreement and payment for the services provided will be in accordance with prevailing market rates Privacy The Trustee has a privacy policy in place which regulates how the Trustee treats Investors information. In applying for Units, you will be required to supply personal information to the Trustee. Personal information provided will be used to process applications and to administer and report on Investors unitholdings and the operation of the Trust. Where necessary and permitted by law, an Investor s personal information may also be provided to third parties to enable the Trustee to provide services to Investors, or to persons Investors authorise to have their information (such as an adviser). The Trustee may, in certain circumstances, be required to also disclose Investors personal information as required by law. Personal information may also be used by the Trustee to offer Investors products and services of the Trustee and its related entities. A copy of the privacy policy is available from the Manager (see contact details in the corporate directory on page 3) Anti-money laundering and counter-terrorism financing The Federal Government has enacted laws in relation to money laundering and terrorism financing. The Trustee may require further information from anyone who submits an Application Form, or may request evidence to verify the identity of applicants or entities involved with applicants. The Trustee will only request this information where it reasonably considers the information to be necessary or desirable to satisfy its obligations under the laws of Australia or any other country. Information may need to be disclosed to government or law enforcement agencies and independent contractors retained by the Trustee to advise on and implement procedures to satisfy anti-money laundering obligations. The Trustee may also disclose this information to other entities involved in the Trust, to the extent that this information is required to fulfil that entity s anti-money laundering obligations. The Trustee will only disclose information about Investors where it reasonably considers that it is required to do so by the laws of Australia or the relevant country. Information obtained by the Trustee will be maintained in a secure manner for the period of time required by the laws of Australia. 38

38 11. Glossary The following terms and abbreviations used in this IM have the following meaning: Term Meaning $ All dollar amounts are in Australian dollars. AFS licence Applicant(s) Application Application Form Application Money ASIC Assets Business Day Closing Date Constitution Corporations Act GST IM Investor IRR Australian Financial Services Licence. A person(s) who submits a valid Application Form pursuant to this IM. A valid application for Units made pursuant to this IM by using an Application Form. The application form(s) included in or accompanying this IM, including a paper version of an electronic application form. The amount of money, equivalent to the initial capital call of Units applied for, accompanying an Application Form. Australian Securities and Investments Commission. The property, assets and rights of the Trust, including the Property. Any day that is not a Saturday, Sunday or gazetted public holiday in Perth, Western Australia. 23 March 2012 (unless the Offer period is extended or reduced by the Trustee in its discretion). The Constitution of the Trust dated 6 March 2012 as amended from time to time. Corporations Act 2001 (Cth) (including the Corporations Regulations 2001) as amended from time to time. Tax levied under a New Tax System (Goods and Services Tax) Act 1999, as amended. This document. A holder of Units. Internal Rate of Return is defined as the discount rate, expressed as an annual percentage rate, which, when applied to a series of pre-tax cash flows (including the value of any non-cash distribution), results in a net present value of zero, as at the date of calculation. This measures the annual rate of return to Investors taking into account the time at which they pay money to the Trust and receive distributions from the Trust. Manager Mair Property Funds Limited ACN Offer Property The offer to acquire Units in the Trust, as set out in this IM. Midland Central Shopping Centre, Great Eastern Highway, Midland WA Quarter Each consecutive period of 3 months ending on 31 March, 30 June, 30 September and 31 December. Trust Midland Central Property Trust. Trustee Property Nominees Pty Ltd ACN

39 Unit Wholesale Investor An ordinary partly-paid unit in the Trust. A person to whom a regulated disclosure document is not required to be given because the person satisfies at least one of the following: A professional investor (as that term is defined in the Corporations Act). Invests at least $500,000 into the Trust. Meets the minimum asset ($2.5 million of net assets) or income ($250,000 of gross income for the last two financial years) requirements set out in the Corporations Act and provides an independent accountant s certificate certifying that fact. Otherwise satisfies the Trustee they are not a retail client for the purposes of Chapter 7 of the Corporations Act. 40

40 12. How to Invest Applications under the Offer must be made on the Application Form attached Application Form The form is an application for units in Midland Central Property Trust. By lodging this form, you are agreeing to the following: To be bound by the provisions of the Constitution as may be amended from time to time in the future. Authorise the Trustee or its assigns to complete and execute any documents necessary to effect the allotment of any Units. Declare that you have read this IM and that all statements made by you in the Application Form are complete and accurate. Declare that you are a Wholesale Investor. That the Trustee may accept or reject your application in whole or in part. That the Trustee has absolute discretion to allocate Units as it sees fit. You have made an offer to become an Investor in the Trust and that offer cannot be revoked. You have not relied on any statements or representations made by anybody (including the directors of the Trustee and Manager and their officers, employees or agents) prior to applying, other than those representations contained in the IM, and have conducted your own due diligence and enquiries on the prospects of the investment. You have relied upon your own independent financial and taxation advice. That the Trustee cannot guarantee the performance of the Trust or the repayment of capital. Units issued in the Trust will not be listed on any market and there is no secondary market for the Units. Therefore, the investment is illiquid and long term. That neither the Trustee not the Manager and their officers, employees or agents have provided you with any advice or recommendation as to the suitability of an investment by you in the Trust. To provide any further information required by the Trustee to fulfil any banking, statutory or licensing requirements prior and subsequent to accepting your Application Tax File Number You do not have to provide us with your Tax File Number (TFN). However, if you do not provide your TFN, then we may be required to deduct tax from any income paid to you at the top marginal tax rate. You may be eligible for an exemption to provide your TFN, in which case you will need to state the reason in the Application Form in the space provided. 41

41 Trust Application Form Midland Central Property Trust Once completed please fax to or mail to Property Nominees Pty Ltd, ATF Midland Central Property Trust, PO Box 7427, Cloisters Square, Perth WA Details of Applicant Name of Applicant Full name(s) / Company Names (and A C N) / trust name (including name of trustees) Contact name (if applicant is a company or a trust) Mailing Address Home Tel: Fax: Work Tel: Date of birth or incorporation: Place of birth or incorporation: Tax File Number: Banking Details for Distributors Name of account: Insert name of account which is to be credited Bank: BSB: Branch: A/C No: Important Notice: If you have a financial adviser, you should have provided the required documentation to your financial adviser to enable them to conduct the applicable identifications and verification procedures and complete the verification form. If you do not have a financial adviser, you must complete the verification form yourself and have the identification material you provide certified. The Verification Form is available to you at:

42 Application I/we apply for Units in the Trust to the value of $ Note: each unit will be issued at a price of $1.00 By signing this application form: I/we agree to be bound by the terms and conditions of the trust deed establishing the Midland Central Property Trust and to observe and perform all the obligations imposed on me/us by that trust deed. I/we declare that the details inserted in this application form are complete and accurate. If a sole signatory on behalf of a company, I confirm that I am signing as a sole director and secretary of the company. If investing as a trustee (on behalf of a superannuation fund or trust), I/we confirm that I am/we are acting in accordance with my/our designated powers and authority under the trust deed. In the case of a superannuation fund, I/we also confirm that it is a complying fund under the Superannuation Industry (supervision) Act If this application is signed under Power of Attorney, I/we have attached a certified copy of the Power of Attorney with this application. I/we declare that I/we meet the definition of wholesale client in section 761G of the Corporations Act I/we agree and acknowledge that we are liable to pay a further capital call (equal to 90% of the issue price of a unit) by Monday 14th May 2012 and that my/our failure to pay this amount in full by the due date may result in my/our Units being forfeited. I/we acknowledge that the neither the Trustee nor the Manager guarantees the performance of the Trust or return of capital. I/we further acknowledge that the subscription is subject to investment risk, including the loss of income and capital. The first trance of funds, being $ (10%) payable to Property Nominees Pty Ltd ATF Midland Central Property Trust is attached/has been transferred to: Property Nominees Pty Ltd ATF Midland Central Property Trust, NAB Bank BSB , A/C No: , File reference: [Investors name] Signature(s) Signature 1 or Director 1 or Sole Director and Sole Secretary Signature 2 or Director 2 Secretary Print Name and Office Held: Print Name and Office Held: Date:

43 PROPERTY FUNDS LIMITED 44