K S I Investments No 6 and No 7 Land Release Sydney Land Reserve KSI Investment Pubic Fund
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3 THE LAND
THE LAND No. 6 No. 7 4
DETAILS OF THE LAND Address 60 Devonshire Road, Rossmore 64 Devonshire Road, Rossmore Size 60 Devonshire Road, Rossmore 25,590m2 / 6.32acre / 2.5ha 64 Devonshire Road, Rossmore 21,170m2 / 5.23acre / 2.1ha Zoning TOTAL Price Total $7,560,000 Price $/m2 $162/m2 RU4 - Rural Small Holdings 46,760m2 / 11.55acre / 4.6ha 5
ABOUT THIS DOCUMENT The purpose of this document is to set out the details of the proposed land investment in the following three sections 01 02 03 WHY DID WE CHOOSE THIS LAND? CURRENT MARKET PRICES FORECAST RETURNS 6
01 WHY DID WE CHOOSE THIS LAND? 7
AREA Located within the future growth area of Sydney 8
AREA 5km 10 mins 20k m 30 mins 40k m 60 mins 9
AREA The land located: 1. 5kms or 10 minutes drive from Western Sydney Airport at Badgerys Creek 2. 20kms or 30 minutes drive from key centers such as Penrith, Campbelltown, Liverpool 3. 40kms or 60 minutes drive from Sydney CBD Channel 7 coverage on the Badgerys Creek Airport 10
LOCATION Close proximity to key economic and social infrastructures 11
Schools 500m 2km 5 mins Medium density housing Local centres ROSSMOR E PLANNED CENTRE Planned railway station 4km 10 mins LEPPINGTO N CENTRE 12 Existing railway station
LOCATION DETAILS WITHIN 4 KMS FROM THE LAND The land is located in close proximity to the future regional centre at Leppington Artist Impression of Leppington Town Centre In mid 2017 it was classified as a priority precinct by NSW Planning department to accelerate its development Leppington Centre Key Aspects: Operating train station Planned supermarket and department store of 60-80,000m2 (Top Ryde Shopping Centre 78,000m2, Rhodes - 55,000m2) Community Centre Cultural Centre Aquatic and Sport Centre A large Integrated Hospital Office towers and industrial area Employment for 13,000 people 13
14 WITHIN 2 KMS FROM THE LAND LOCATION DETAILS The land is located in the future Rossmore precinct with a future centre at Bringelly road (Employment, Shopping & Train station) Rossmore Precinct Description Future Plans Population Current: 1,500 Future: 25,000 Housing (Low, Medium and High densities) Industrial area Supermarkets Local shopping areas Current: 600 Future: 9,000 Size to be determined 1-2 (Coles, Woolworths) 7-8 (Shopping village) Retail floor space 20,000m2 25,000m2 Essential services Train station Source: Department of Planning NSW 15 General practitioners, 3 Child care centres, 3 Primary schools, 1 High school Location currently under Govt. planning
WITHIN 500Ms FROM THE LAND LOCATION DETAILS The land is located 500ms from the zoned area of Austral Several village centres with local shops and essential services to be located here Both primary and high schools are expected to be walking distance away Based on our analysis it is likely that the land will be zoned low density residential. If this is the case, the capacity of the land is expected to be between 110 140 houses with 275 350 people living there. 15
LAND A land that meets our stringent assessment criteria 16
17 THE LAND FROM ABOVE
THE LAND DIMENSIONS 365m 60m 180m 18
19 THE LAND TOPOGRAPHY
DESCRIPTION A clear flat land on flood free area THE LAND OVERVIEW The property has a slight ascent from East to West from 69meters it rises to 76meters Current properties on the land: House 1: Four bedroom brick home (Estimated rent : $620 per week) House 2: Four bedroom brick home with in-ground pool and Colorbond shed (Estimated rent: $550 per week) House 3: Three bedroom brick home with in-ground pool and outdoor entertaining area (Estimated rent: $500 per week) Unit 1: Two bedroom self contained with bathroom and kitchen (Estimated rent: $380 per week) Unit 2: One bedroom self contained with bathroom and kitchen (Estimated rent: $300 per week) Shed: 60x40 foot with large carport (Estimate rent: $400 per week) The land is irrigated as it was used for rose production in the past, however current owners are not operating the rose farm anymore 20
02 CURRENT MARKET PRICES 21
LAND PRICE EXAMPLES Examples showcasing the current market conditions 22
RECENT SALES ROSSMORE Address Sales Date Sales Price $/m2 90 Devonshire Road, Rossmore 30/06/2017 $177 727 Bringelly Road, Rossmore 21/06/2017 $206 79 Rossmore Crescent, Rossmore 05/06/2017 $185 131 Graham Road, Rossmore 23/05/2017 $189 15 Devonshire Road, Rossmore 16/12/2016 $194 25 Devonshire Road, Rossmore 16/12/2016 $196 60-64 Devonshire Road, Rossmore 20/09/2017 $162 The purchase price of our land at 60-64 Devonshire Road, Rossmore was $162/m2 which is 10% - 25% lower than the comparable market prices displayed in the table above. 23
RECENT SALES SOUTH WEST GROWTH CENTRE We looked at the recent sales for comparable land in the suburbs of the SWGC that have gone through the rezoning process and development has commenced. Austral is the neighbouring suburb and is 500 meters from the land. Suburb Date of Rezoning Austral March 2013 Recent comparable sales examples from the above suburb: Address Sales Date Sales Price $/m2 Forecasted price with DA (+30%) 125 Tenth Avenue, Austral 22/03/2017 $380/m2 $494 65 Sixteenth Avenue, Austral 07/02/2017 $354/m2 $460 20 Craik Avenue, Austral 29/10/2016 $390/m2 $507 24
03 FORECASTED RETURNS 25
26 FORECASTED RETURNS
FORECASTED RETURNS In our forecasting methodology we conducted the followings: 1. RAW RURAL ZONED LAND COMPARED WITH RESIDENTIAL ZONED LAND WITH DA 2. PRICE GROWTH SCENARIOS 2017-2027 Compare the 2017 price of the raw land we invested in to the estimated price of land that has a completed DA application. Based on our analysis across the rezoned areas of the North West Growth Centre and South West Growth Centre, we observed that DA approved land command 30% premium compared with land without it. Analyse three potential scenarios of where the future land prices might be heading in the next 10 years. 27
1. RAW RURAL ZONED LAND COMPARED WITH RESIDENTIAL ZONED LAND WITH DA The price gap in 2017 - $600 $500 $507 $494 $400 $300 Price difference of ~300% $200 $162 $100 $- 2017 60-64 Devonshire Road, Rossmore 20 Craik Avenue, Austral 125 Tenth Avenue, Austral 28
2. PRICE GROWTH SCENARIOS 2017-2027 We have identified two relevant scenarios that can drive the prices and would result in two different outcomes for the land holding: A. LOW 13% pa Land prices grow with the average rate noted between 1985 2005 in the NWGC and SWGC when the land was still zoned raw rural. The price growth in this period was the natural increase in land values as rezoning to residential only impacted prices from 2006. B. MID LEVEL 23% pa Prices continue to grow with the average rate of the past 5 years of the NWGC to account for the impact of the rezoning to residential and development of the area. During this period 90% of the NWGC has been rezoned from rural to residential. 29
A. LOW 13%pa If in 2027 the land is still zoned rural it can reasonably be expected that the historical trend of 13%pa growth rate continues from 2017 to 2027 and the land value is expected to rise accordingly. $600 $550 $500 $400 $300 $200 $162 $100 $- 60-64 Devonshire Road, Rossmore - raw zoned rural A. LOW - 13%pa 2017 2027 30
B. MID LEVEL 23%pa If the land is rezoned to residential between 2017 and 2027 it can reasonably be expected that the historical trend of 23%pa growth rate noted in the NWGC eventuates and the land value is expected to rise accordingly. This coupled with obtaining a DA the value can be further enhanced. $1,800 $1,600 $1,400 $1,200 $1,000 $800 $600 $1,669 $400 $200 $- $162 60-64 Devonshire Road, Rossmore - raw zoned rural MID CASE - 23%pa WITH DA 2017 2027 31
CONCLUSION Based on our analysis we believe the followings might take place during the time to 2027 LAND PRICE GROWTH CONTINUES THE RURAL ZONING PRICE TREND LAND PRICE GROWTH FOLLOWS THE RESIDENTIAL ZONING PRICE TREND If land remains zoned rural, prices are expected to follow historical trends of 13% pa resulting in approximately 340% ($162/m2 to $550/m2) increase. If land zoning changes from rural to residential prices are expected to grow: a. 23%pa: Total increase would be approximately 1030% ($162/m2 to $1,669/m2) 32
Credit Preliminary Land Investment Budget Debit 1. TOTAL FUNDS TO BE RAISED: $8,650,000 2. Deduct Price of Land: $7,560,000 3. Deduct Land Stamp Duty : $469,690 4. Deduct Fund Management Fee ( 2% p.a. for 10 yrs., however may be less than 10 yrs.) $1,512,000 5. Add Rental Income ( 3 houses, 2 granny flats, 1 shed) $1,423,464 6. Add Rental Income ( Market gardens) TBC 7. Deduct Fund Raising Fee $378,000 8. Deduct Land buying Fee $75,600 9. Deduct $78,174 TOTAL $10,073,464 $10,073,464 (Finalised budget to be disclosed in the SPDS ) 33
Investment Return Calculation INVESTOR RETURN CALCULATION 1. Forecasted land price appreciation of 1030%: $7,560,000 x 1030% = $77,868,000 2. Deduct Total investment of $8,650,000: $77,868,000 - $8,650,000 = $69,218,000 3. Deduct 20 % KSI Performance Fee ($69,218,000X20%=$13,843,600) $69,218,000 - $13,843,600 = $55,374,400 Total Investor Return $55,374,400 UNIT HOLDERS RETURN CALCULATION C) Total Unit Investment x Investment return % = Total Investor Return = $8,650,000 x A% = $55,374,400 A%=Unit investment Return% = 640 % Unit Total Return (Profit + Principle) = 640%+100%=740% (7.4 fold) 34 (Finalised budget to be disclosed in the SPDS )
Unit Holder Investment Return WORKED EXAMPLE Investmen t amount in 2017 Forecasted Total Return % TOTAL INVESTMENT RETURN Principle Included, No Taxes (Estimated fund dissolution date between 2022 and 2027) Guarantor $10,000 740% $74,000 Guarantor $50,000 740% $370,000 Guarantor $100,000 740% $740,000 Guarantor $200,000 740% $1,480,000 Guarantor $500,000 740% $3,700,000 Guarantor $1,000,000 740% $7,400,000 35
36 Land Banking Time Line
Assumptions 1. The South West Growth Centre s rezoning speed is expected to match that of the North West Growth Centre Source: NSW Department of Planning and Environment 2. The South West Growth Centre s current rezoning timeline provides evidence on the speed of this rezoning process The process is currently being streamlined to provide for future 2 year rezoning period. Source: NSW Department of Planning and Environment 3. First Stage of Sydney s second airport at Badgerys Creek is expected to be completed by 2026, according to the Federal Government Timetable. Source: Federal Government Department of Infrastructure and Regional Development 37
1. The South West Growth Centre s rezoning timeline is expected to match that of the North West Growth Centre Suburb Rezoning Announced by the NSW Government Rezoned Time taken to rezone 1. North Kellyville June 2006 December 2008 2 years 6 months 2. Riverstone West June 2006 August 2009 3 years 2 months 3. Riverstone January 2007 May 2010 3 years 4 months 4. Alex Avenue January 2007 May 2010 3 years 4 months 5. Marsden Park Industrial June 2008 November 2010 2 years 4 months 6. Area 20 Not available October 2011 Can t calculate 7. Schofields October 2009 May 2012 2 years 7 months 8. Box Hill & Box Hill Industrial October 2009 April 2013 3 years 6 months 9. Marsden Park July 2011 October 2013 2 years 3 months 10. Riverstone East August 2013 August 2016 3 years 11. Vineyard August 2013 TBA TBA 12. Marsden Park North June 2014 TBA TBA 13. West Schofields September 2016 TBA TBA 14. Shanes Park TBA TBA TBA Between 2006 and 2016 10 precinct or 80% of the total precincts were rezoned. On average one precinct per year was rezoned and the rezoning process took 3 years. 38
2. The South West Growth Centre s current rezoning timeline provides evidence on the speed of this rezoning process Suburb Rezoning Announced by the NSW Government Rezoned Time taken to rezone 1. Turner Road June 2006 Dec 2007 1 year 6 months 2. Oran Park June 2006 Dec 2007 1 year 6 months 3. Edmondson Park June 2006 May 2008 1 year 11 months 4. Austral and Leppington North December 2009 March 2013 3 years 3 months 5. Catherine Fields II. August 2011 March 2013 1 year 7 months 6. East Leppington November 2011 March 2013 & Aug 2014 1 year 7 months to 2 years 8 months 7. Leppington November 2011 November 2015 4 years 8. TBA TBA TBA TBA 9. TBA TBA TBA TBA 10. TBA TBA TBA TBA 11. TBA TBA TBA TBA 12. TBA TBA TBA TBA 13. TBA TBA TBA TBA 14. TBA TBA TBA TBA 15. TBA TBA TBA TBA 16. TBA TBA TBA TBA 17. TBA TBA TBA TBA 18. TBA TBA TBA TBA Rezoning was slower in SWGC as the Government was prioritising the NWGC. As the land is 80% rezoned in NWGC, the Government is expected to accelerate rezoning in the SWGC. Only 40% of total precincts is rezoned and on average the rezoning takes anywhere between 2 4 years. 39
3. First Stage of Sydney s second airport at Badgerys Creek is expected to be completed by 2026 We believe that this new airport will provide an additional boost to the speed of development in the proximity of the airport. Both the Federal and NSW Governments stated that they are looking to develop the area around the airport as an Aerotropolis (Airport city) to bring business, commercial activity close to the Airport. 40
1200% FORECASTED LAND ZONING SEQUENCE 1000% RURAL LAND GOVERNMENT ZONING PROCESS KSI INVESTMENTS DA PROCESS 1024% 800% 600% 510% 512% 400% 200% 159% 139% 320% 226% 314% 0% YEAR 0 YEAR 2 YEAR 5 YEAR 7 YEAR 10 41 Guarantor - 23% p.a Preferred - 23% p.a
42 Reasoning for the forecast: FORECASTED LAND ZONING SEQUENCE Based on the evidence noted of rezoning sequence at the NWGC and SWGC, KSI Investments forecasts that the historical trends are expected to continue as population growth accelerates and Sydney s housing is still undersupplied. 1. It is expected that the NSW Government will accelerate the rezoning speed of the SWGC to match that of the NWGC s average 1 precinct per year and taking on average 3 years to complete rezoning 2. Given the NWGC is already 80% rezoned and currently 3 precincts are under the rezoning process it is expected that in the next 2-3 years 95% of land in the NWGC will be rezoned. This will leave the SWGC the next area of the Government s rezoning focus. This is expected to lead to accelerated rezoning of the SWGC and supports the expectation of 1 precinct per year and 3 years lead time to complete the rezoning of a precinct. 3. In the SWGC the last rezoning took place in 2015. The above evidence supports that in the next 2 years the Government is expected to start the rezoning of new precincts as it follows the historical pattern of 1 precinct per year. Therefore we forecasted that the rezoning process might commence in 2 years time and will take 3 years to complete. Based on our experience with DA, we forecast that this will take around 2 years. Therefore the total of this land to mature is expected to be 7 years. 4. The completion of stage 1 of the Badgerys Creek Airport in 2026 is expected to provide further pressure on the Government to accelerate rezoning around the airport to provide the necessary commercial and business opportunities and infrastructure necessary.
Apply today: Sydneylandbanking.com.au Or call us: 0422 809389 Edmund 0412 394925 Endre 0412 599591 Robin 0430 680555 Michael Welcome follow us on facebook: m.facebook.com/sydneylandbanking 43
Contact us At Our North Sydney Offices Suite 404, 53 Walker Street, North Sydney, NSW 2060 +61 (2) 9955 8851 Edmund 0422809389, Endre 0412394925 Robin 0412599591, Michael 0430680555 Sydneylandbanking.com.au www.ksiinvestments.com.au office@ksiinvestments.com.au Flow us on Facebook and Linkedin: Sydneylandbanking.com.au 44