Information Memorandum

Transcription

1 AHG Property Syndicate No. 1 Date of issue: February Information Memorandum *AHG is the tenant of the syndicated properties Secure 15 year lease to AHG Australia s largest automotive retailing & logistics group Forecast first year return - % pa Nine year average income forecast % pa Total forecast return (income & capital gain) 15% pa API is a leading West Australian property syndicator and manager specialising in commercial property investment with a proven track record of delivering strong income returns and capital growth. Since 2001, API has successfully managed 15 commercial property syndicates with a value in excess of $400 million.

2 Information Memorandum AHG Property Syndicate N o. 1 Important Notices THIS DOCUMENT IS NOT A PROSPECTUS This Information Memorandum ( Memorandum ) is not a prospectus. This is a personal offer that may only be accepted by the person to whom it is made. This Memorandum is specifically provided to the receiving parties ( Recipients ) for the purpose of reviewing this investment opportunity offered by Australasian Property Investments Ltd (ACN ) ( API ) and to facilitate the making of offers which do not require disclosure to investors under Chapter 6D of the Corporations Law. Accordingly, this Memorandum has not been lodged with the Australian Securities and Investments Commission. Any information contained in this Memorandum, or subsequently provided to the Recipient whether orally or in writing by or on behalf of API or its respective employees, agents or consultants ( Information ) is provided to the Recipient on the terms and conditions set out in this Memorandum. CONFIDENTIALITY This Memorandum has been provided to selected parties. The Memorandum (and the information contained in it) is confidential. It is not intended for and should not be distributed to any other person. By receipt of the Memorandum, the Recipient agrees that it will not transmit, reproduce or make available the Memorandum (or any information contained in it) to anyone other than its professional advisers, without the prior written consent of API. Any such disclosure to the advisers of the Recipient must be on a confidential basis, for the purposes only of assessing the information contained in it as adviser to the Recipient. DISCLAIMER An investment in the Syndicate is subject to investment and other risks, including delays in repayment and/ or loss of capital invested. The information contained in this memorandum does not take into account the investment objectives, financial situation and particular needs of intending investors. It is important that you read the entire Memorandum before making any decisions to invest in the units, and in particular in considering the prospects of the Syndicate. You should carefully consider these factors in light of your particular investment needs, objectives and financial circumstances (including financial and taxation issues) and seek advice from a suitably qualified professional advisor before deciding whether to invest. Please refer to the risks highlighted in section 12. Neither API, nor its related entities, directors or officers, give any guarantee, promise, representation or assurance as to the performance of the Syndicate or the repayment of capital. The information in this memorandum is not personal advice. API is not licensed to provide personal financial product advice in relation to the units to be issued in the AHG Property Syndicate No. 1 Unit Trust. There is no cooling off regime in respect of any application to acquire units in the AHG Property Syndicate No 1 Unit Trust. AHG has not authorised or caused the issue of this Information Memorandum and does not make or purport to make any statement in it. AHG is not involved in promoting the investment opportunity and provides no endorsement or recommendation in relation to it whatsoever. Except for its interest as tenant of the syndicated properties, AHG has no interest in the AHG Property Syndicate No. 1 or API. To the maximum extent permitted by law AHG expressly disclaims and takes no responsibility for any part of this Memorandum. PRIVACY STATEMENT By applying to invest in the Syndicate, you are providing personal information to API. The Privacy Act 188 (Cwth) regulates the way API collects, uses, disposes, keeps secure and gives people access to their personal information. API is committed to respecting the privacy of your personal information. API has adopted a privacy policy, which states how API manages personal information. You can obtain a copy of that policy by writing to us. API collects, holds and uses personal information in order to process your application, and if your application is successful, administer your holding in the Syndicate. ANTI MONEY LAUNDERING AND COUNTER TERRORISM ACT If you are a new investor with API, before we can accept your application it will be necessary to provide certified photographic identification of your identity. If you are making an application as a company, Trust or Superannuation Fund we will require details of the registration of the entity and certified photographic identification of at least one of the directors if a company or details of the Trustee and beneficiaries of the Trust and certified photographic identification of the Trustee. Further details of the requirements can be obtained from API. THIS MEMORANDUM IS TO BE READ IN CONJUNCTION WITH THE FOLLOWING REPORTS: Annexure A: Jones Lang LaSalle Valuations dated February,

3 Information Memorandum AHG Property Syndicate N o. 1 Contents 1. INTRODUCTION 5 2. INVESTMENT SUMMARY 6 3. INVESTMENT FEATURES 7 Investment Objective 7 Income 7 Tax Benefits 7 Growth 7 Income Distribution 8 Reporting 8 The Property 8 Syndicate Strategy 8 4. PROPERTIES Perth, Western Australia Properties Sydney, New South 17 Wales Properties Environmental Investigation 23 Development Approvals ACQUISITION 24 Investment Strategy 24 Development Agreement 24 Acquisition Funds 25 Investment In The Property 25 Trustee 25 Syndicate Unit Trust 25 Purchase Price 25 Valuation 26 Funding 26 Investment Term 26 Sale Of Investment 27 Management 27 Fees 27 Success Fee 27 Working Capital AHG LEASE 28 Development Rental 2 Adjustment Schedule Tenancy Schedule The Tenant - AHG 31 Milestones 31 AHG Financial Strength 32 Strong Balance Sheet 32 Automotive Retailing 33 AHG Dealership Network 34 Logistics 35 Dual Revenue Streams 36 New Vehicle Sales ACQUISITION COSTS 37. FORECAST CASH 38 Distribution Cash Flow Assumptions Forecast capital Return 40 Forecast Return Assumptions 40 Annual Cash Distribution TAXABLE INCOME 41 PROJECTIONS 12. RISK FACTORS 43 Interest Rates 43 Market Conditions 43 Forecast Returns 43 Regulatory Changes 43 Leasing Risk 43 Valuation Risk 43 Working Capital Account 44 Unexpected Capital 44 Expenditure Illiquid Investment 44 Buildings Are Destroyed 44 Financing Risk THE TRUSTEE AND 45 SYNDICATE MANAGER Australasian Property Investments Ltd ( API ) 45 Potential Conflicts 45 of Interest Property Portfolio Information on 47 How to invest Who Can Invest? 47 How Do I Invest? 47 What Is The Cut Off Date 47 For Investing? How Do I Pay? 47 How To Complete 48 The Application Form 15. FORMS 4 Application Form 50 Wholesale Certificates Annexure A Jones Lang LaSalle Valuations 55 4

4 1. INTRODUCTION Dear Investor It is with pleasure that I provide our investors with our most important investment opportunity in more than a decade of business activity, the AHG Property Syndicate No 1 Unit Trust. This syndicate represents a new class of investment offering long term leases to Australia s largest automotive group, Automotive Holdings Group Limited ( AHG ). The acquisition is a portfolio of 5 automotive dealership properties; four in Perth, Western Australia and one in Sydney, New South Wales. All properties have main road exposure and the buildings when fully developed will be modern well-presented showroom premises. Castle Hill will be a hub of car dealerships hosting 4 separate manufacturers, initially Holden & Hyundai which are currently in construction phase and two further dealerships to be announced later this year. Our investment strategy, which is most prevalent with this investment, has always been focused on the three core aspects of property investment; High yielding reliable income Capital growth opportunity, and Tax deferred benefits In this difficult and uncertain time in world markets, API has focused on delivering an investment to our clients which provides long lease tenure by Australia s largest automotive retailing and logistics group. Our research into the business activities of AHG is extensively covered in this memorandum and we are confident that AHG can fulfill its lease obligations throughout the initial 15 year lease term. As always the case, we believe that we have thoroughly researched the property the subject of this Information Memorandum. We hope that you find this investment opportunity to your liking and will join a syndicate of wholesale investors to acquire this property. Please contact me should you have any queries regarding this investment. Yours faithfully Peter Hughes Managing Director. 5

5 Information Memorandum AHG Property Syndicate N o INVESTMENT SUMMARY Offer opens Issue date of this Information Memorandum. Offer closes Upon application for units being fully subscribed; anticipated 30th March, Settlement date Investment overview Investment amounts Distributions Forecast income distribution 45 days from close of fully subscribed units. A fixed term property syndicate, acquiring 5 automotive dealership properties located in Western Australia and New South Wales on a sale and lease back to AHG for an initial 15 year lease term providing investors with an initial income return (dividend) of %. This offer is available to wholesale investors only. $500,000 or a minimum of $100,000 if the investment is undertaken by a wholesale investor (see page 25 Investment in the Property). Income is distributed to investors on a monthly basis directly into a specified bank account..0% first year income distribution 11.4% average income distribution over year term Forecast capital growth Average annual capital growth on equity: 3.6% pa Total capital growth on equity: 32.7% Investment timeframe years Unit issue price $1.00 The properties Purchase price Experienced manager Four properties located in Perth, Western Australia and one property located in Sydney, New South Wales. The properties are being acquired for $47.18m, with a current valuation for finance purposes of $47.18m. The Syndicate will pay a further $1m to AHG for the construction of 4 new car dealerships to be erected at Castle Hill, Sydney. API is a leading West Australian investment business managing a significant portfolio of property assets for investors for more than 10 years. Borrowings Initial loan drawdown of $15.0m and bank guarantee option of $1m providing peak borrowings totalling $34.0m providing a LVR of 51%; Anticipated interest rate at settlement is 6.25%. See page 26 - Funding. Equity to be raised from investors $38.0m equity to be raised through the issue of 38,000,000 million $1.00 Units Fees and costs Syndication fee: API will receive a Syndication fee of 3.25% of the purchase price and the added value ($1m) of the new automotive dealership complex development at Castle Hill, NSW (to be received at the completion of each stage). Management fee: 2.5% of net operating income The first full financial year management fee is included in the Syndication fee. Success fee: 20% of that portion of the gross selling price of the property that exceeds the forecast termination sale price of $85,300,588. Exit fees: Nil. See Unit Trust Deed for all fees and costs Access to your investment Investors may exit a syndicate prior to expiry of the term, by selling their Units to a third party. There is no established secondary market for the sale of units in a syndicate and whilst API will assist in a sale of an interest, investors should note that API syndicates are an illiquid investment. 6

6 3. INVESTMENT FEATURES INVESTMENT OBJECTIVE The AHG Property Syndicate No 1 Unit Trust ( the Syndicate ) is a managed investment providing investors with an opportunity to acquire strategically located property offering income and capital growth opportunities together with significant tax benefits during the lifetime of the Syndicate. API proposes to create the AHG Property Syndicate No 1 for the following reasons: High yielding income investment; Opportunity to acquire strategically located commercial property in two regions; Perth and Sydney; A long term leasing covenant provided by a leading ASX listed public company; Potential for capital growth over the proposed year term of the Syndicate. INCOME Cash distributions to investors as a percentage return on equity invested is forecast to be: %.1%.4% 10.2% 10.6% 11.3% 12.3% 13.1% 13.8% 14.6% Nine year average income forecast is 11.4% TAX BENEFITS A depreciation schedule has been prepared by Quantity Surveyors, Napier & Blakely. API instructed its accountants BDO to review the depreciation schedule and provide calculations of forecast after-tax returns to reflect the benefits of the depreciation allowances available from the property. The table below shows the annual percentage of tax deferred distributions % 78.1% 68.5% 61.6% 56.5% 43.% 38.3% 35.1% 32.5% 30.1% The effect of depreciation on the cash distributions gives the following comparative effective distributions, after taking into account the tax deferral benefits, when compared to a bank term deposit i.e. what annual interest rate is required from a term deposit to have the same after tax return. The schedule below provides the first 5 financial years of an indicative comparison % 15.28% 15.00% 15.66% 15.80% GROWTH The Syndicate is anticipated to generate capital growth over the Term as follows. Forecast total capital growth on equity ($100,000) over the Term 32.7% Average annual capital growth on equity ($100,000) 3.6% 7

7 Information Memorandum AHG Property Syndicate N o. 1 INCOME DISTRIBUTION Investors will receive income distributions monthly in arrears. REPORTING API will meet with investors at least once a year to review the annual accounts. API will also undertake quarterly BAS returns on behalf of the Syndicate and prepare annual financial reports. The property will be directly managed by a national real estate agency, which will provide quarterly and annual reports of income and expenditure. THE PROPERTY The AHG Property Syndicate No 1 comprises five individual properties, four in Perth, Western Australia and one in Sydney, New South Wales. Individually the properties are described as follows: 1 Carlston Road, Rockingham Rockingham Hyundai & Suzuki dealership occupying premises of 3,433 sqm on a site of 10,000 sqm. 10 Smeaton Way, Rockingham Challenger Ford new vehicle dealership occupying premises of 1,86 sqm on a site of 7,52 sqm. 12 Smeaton Way, Rockingham Challenger Ford used vehicle dealership occupying premises of 363 sqm on a site of 7,223 sqm Great Eastern Highway, Midland Midway Ford dealership occupying premises of 1,712 sqm on a site of 5,628 sqm. 2a Victoria Avenue, Castle Hill Initially, Castle Hill Holden & Castle Hill Hyundai dealerships occupying premises of 3,10 sqm & 3,300 sqm respectively with two future dealerships of 2,035 sqm each together with 30 industrial units on a site of 43,310 sqm. SYNDICATE STRATEGY The Syndicate strategy is to hold the property for a term of nine () years from settlement. Subject to investor approval, at the end of the term, the properties will either be sold to the open market or the Syndicate will agree to extend the term. If strong market circumstances prevail during the Syndicate term, the trustee may recommend the sale of the property prior to the end of the syndicate term. An approval to sell the property prior to the end of the syndicate term requires syndicate members holding 65% of the total units to agree to the sale. 8

8 Tonkin Highway 4. Properties 10 Smeaton Way, Rockingham, WA Challenger Ford Property: Challenger Ford new vehicle dealership. Approximately 6 kilometres north east of Rockingham s Central Business District and within the East Rockingham Industrial Park which has continued to develop as a high profile precinct notable for accommodating car dealerships, showrooms and small sized industrial premises including the Bunnings Hardware store. Land Area: The land is irregular in shape with a frontage to Smeaton Way of metres and a frontage to Beale Way of 40 metres, to give a total land area of 7,52sqm. Zoning: General Industry under the City of Rockingham Town Planning Scheme No.2 Buildings: Erected on the land is a recently constructed single level motor vehicle sale and service facility with a total building area of approximately 1,86 sqm, The accommodation comprises the following areas:- Office / Showroom / meeting / amenities 685 Spare Parts Store 0 Workshop 16 Service Upgrade 86 Wash bays 148 Mezzanine 61 Gross Lettable Area: 1,86sqm Lease Details: Prior to settlement AHG and a subsidiary company will enter into a formal lease for a term of 15 years with an option for two further periods of 10 years with a commencing rental of $425,000 pa. For full lease details see the tenancy schedule on page 30 Purchase Price: API has negotiated to purchase 10 Smeaton Way and 14 Beale Way, Rockingham, WA at a price of $5,000,000. Valuation: Jones Lang LaSalle has undertaken a recent valuation of the property as instructed by API. Their report has assessed the value of the property at $5,000,000. A copy of the valuation summary is included in the annexure to this Information Memorandum. Full report available on request. Perth, WA PERTH Great Eastern Highway Perth Domestic Airport Perth International Airport Fremantle Ro e Highway Jandakot Airport Byford ROCKINGHAM Kwinana Kwinana Freeway

9 Information Memorandum AHG Property Syndicate N o. 1 Smeaton Way Challenger Ford N Site Plan Showroom Workshop Display & Parking Washbays Midway Ford Beale Way 10 Smeaton Way, Rockingham, WA The Good Guys Patterson Road Smeaton Way Patterson Road Patterson Road Challenger Ford 10 Smeaton wy Pickard Avenue Beale Way Carlston Road Carlston Road Ennis Avenue Ennis Avenue Tesla Road Challenger Ford 10 Smeaton Way AHG Property Syndicate 10

10 Tonkin Highway 4. Properties 12 Smeaton Way, Rockingham, WA Challenger Ford Used Cars Property: Challenger Ford used vehicle dealership. Comprises two adjoining industrial sites situated within the East Rockingham Industrial Park located just north east of the Rockingham city centre. The property has a prominent position with frontages to Smeaton Way and Beale Way and is located adjacent to Challenger Ford new vehicle dealership. Land Area: The property is rectangular in shape with a frontage to Smeaton Way of metres and a frontage to Beale Way of 40 metres, to give a total land area of 7,223sqm. Zoning: General Industry under the City of Rockingham Town Planning Scheme No.2 Buildings: Erected on the land is a recently constructed single level motor vehicle showroom and wash bay with a total building area of approximately 363 sqm, The accommodation comprises the following areas:- Office / Showroom / meeting / amenities 208 Wash Bay 155 Gross Lettable Area: 363sqm Lease Details: Prior to settlement AHG and a subsidiary company will enter into a formal lease for a term of 15 years with an option for two further periods of 10 years with a commencing rental of $27,500 pa. For full lease details see the tenancy schedule on page 30 Purchase Price: API has negotiated to purchase 12 Smeaton Way and 12 Beale Way, Rockingham, WA at a price of $3,500,000 Valuation: Jones Lang LaSalle has undertaken a recent valuation of the property as instructed by API. Their report has assessed the value of the property at $3,500,000. A copy of the valuation summary is included in the annexure to this Information Memorandum. Full report available on request. Perth, WA Kwinana Freew Midland PERTH Great Eastern Highway Perth Domestic Airport Perth International Airport Fremantle Ro e Highway Jandakot Airport Byford ROCKINGHAM Kwinana Kwinana Freeway 11

11 Information Memorandum AHG Property Syndicate N o. 1 Smeaton Way Challenger Ford Used Cars N Site Plan Showroom Display & Parking Washbays Beale Way 12 Smeaton Way, Rockingham, WA The Good Guys Patterson Road Smeaton Way Patterson Road Patterson Road Pickard Avenue Challenger Ford used Cars 12 Smeaton wy Beale Way Carlston Road Carlston Road Ennis Avenue Ennis Avenue Tesla Road Challenger Ford 12 Smeaton Way AHG Property Syndicate 12

12 Tonkin Highway 4. Properties 1 Carlston Road, Rockingham, WA Rockingham Hyundai & Suzuki Property: Rockingham Hyundai and Suzuki dealership. Lot 100 corner of Ennis Avenue and Carlston Road Rockingham WA. Approximately 6 kilometres north east of Rockingham s Central Business District and within the East Rockingham Industrial Park which has continued to develop as a high profile precinct notable for accommodating car dealerships, showrooms and small sized industrial premises including a Bunnings Hardware store. Land Area: The property is almost square in shape with a frontage to Ennis Avenue of 84 metres and a frontage to Carlston Road of 140 metres to give a total land area of 10,000sqm. Zoning: General Industry under the City of Rockingham Town Planning Scheme No.2. Buildings: Erected on the land is a recently constructed single level motor vehicle sale and service facility with a total building area of approximately 3,433 sqm, The accommodation comprises the following areas:- Office / Showroom / meeting / amenities 1,173 Spare Parts Store 140 Workshop 1,85 Wash bays 5 Mezzanine 130 Gross Lettable Area: 3,433 sqm Lease Details: Prior to settlement AHG and a subsidiary company will enter into a formal lease for a term of 15 years with an option for two further periods of 10 years with a commencing rental of $705,500 pa. For full lease details see the tenancy schedule on page 30. Purchase Price: API has negotiated to purchase 1 Carlston Road, Rockingham, WA at a price of $8,300,000. Valuation: Jones Lang LaSalle has undertaken a recent valuation of the property as Instructed by API. Their report has assessed the value of the property at $8,300,000. A copy of the valuation summary is included in the annexure to this Information Memorandum. Full report available on request. Perth, WA Midland PERTH Great Eastern Highway Perth Domestic Airport Perth International Airport Fremantle Ro e Highway Jandakot Airport Byford ROCKINGHAM Kwinana Kwinana Freeway 13

13 Information Memorandum AHG Property Syndicate N o. 1 Ennis Avenue Challenger Ford Used Cars Carlston Road Hyundai & Suzuki N Site Plan Carlston Road Showroom Workshop Display & Parking Washbays 1 Carlston Road, Rockingham, WA The Good Guys Patterson Road Smeaton Way Patterson Road Patterson Road Pickard Avenue Beale Way Carlston Road Carlston Road Ennis Avenue Ennis Avenue Hyundai & Suzuki 1 Carlston Road Tesla Road Rockingham Hyundai & Suzuki 1 Carlston Road AHG Property Syndicate 14

14 Kwinana Freeway Tonkin Highway 4. Properties Great Eastern Highway, Midland, WA Midway Ford Property: Midway Ford dealership. Situated at the intersection of Great Eastern Highway and William Street, approximately 17 kilometres north east of Perth s Central Business District. The location is at the western entry to the Midland city centre precinct, characterised by lower density commercial premises including showrooms, offices, health centre, warehousing and the Centrepoint Shopping Centre. Land Area: The property is almost rectangular in shape with a frontage to Great Eastern Highway of metres and a frontage to William Street of metres, to give a total land area of 5,628 sqm. Zoning: City Centre-Business and City Centre-Deferred under the City of Swan Town Planning Scheme No. Buildings: Erected on the land is a single level motor vehicle sale and service facility with a total building area of approximately 1,712 sqm, The accommodation comprises the following areas. Office / Showroom / meeting / amenities 450 Spare Parts Store 242 Workshop 40 Wash bays 80 Gross Lettable Area: 1,712sqm Lease Details: The property is currently leased to Midway Nominees Pty Ltd for a term of 10 years commencing 1 October 2006 plus 2 x 5 year option terms. At settlement AHG and a subsidiary will enter into a concurrent lease with Australasian Property Investments Ltd ATF The AHG Property Syndicate No.1 Unit Trust for a term of 15 years with an option for two further periods of 10 years with a commencing rental of $372,300 pa. This means that the AHG subsidiary will allow Midway Nominees to continue leasing the premises. However, AHG and the subsidiary will collect the rent from Midway Nominees Pty Ltd and will be responsible for paying to API the required rent for the site. Upon the expiry of the Midway Nominees Pty Ltd lease, the AHG lease will then be the only lease in respect of the premises. For full lease details see the tenancy schedule on page 30. Purchase Price: API has negotiated to purchase Great Eastern Highway, Midland, WA at a price of $4,380,000 Valuation: Jones Lang LaSalle has undertaken a recent valuation of the property as instructed by API. Their report has assessed the value of the property at $4,380,000. A copy of the valuation summary is included in the annexure to this Information Memorandum. Full report available on request. Perth, WA Midland PERTH Great Eastern Highway Perth Domestic Airport Perth International Airport Fremantle Ro e Highway Jandakot Airport 15

15 Information Memorandum AHG Property Syndicate N o. 1 William Street Midway Ford Great Eastern Highway N Site Plan Showroom Workshop Display & Parking Washbays Great Eastern Highwway Morrison Road Morrison Road William Street Poynton Avenue Spring Park Road Midway Ford Great Eastern Hwy The Avenue The Crescent Retail Shops Great Eastern Highway Great Eastern Highway The Crescent Great Eastern Highway Centre Point Shopping Great Eastern Highway Cale Street Railway Parade le Street Midway Ford Great Eastern Hwy 16

16 4. Properties 2a Victoria Avenue, Castle Hill, NSW Holden - Stage 1 Property: The property occupies a prominent position within the Castle Hill industrial area. It lies on the western side of Victoria Avenue on the corner of the controlled intersection with Windsor Road. The property is some 3 kilometres from Castle Hill Shopping Centre and 32 kilometres of the City of Sydney. The area includes a mixture of high quality industrial complexes, showrooms, car dealerships and warehouse/office developments. Land Area: A large, irregular shaped allotment with a primary frontage to Victoria Avenue of 18 metres. Total land area is 43,310sqm. Zoning: 4(b) Light Industry under Baulkham Hills Local Environmental Plan Buildings: Currently erected on the land is a multi-unit industrial estate, comprising eighty three (83) industrial units in seven freestanding buildings constructed in different stages over the past 25 years. The majority of the units are of a similar size and construction. Four of the freestanding buildings, comprising fifty three (53) industrial units and situated adjacent to the Victoria Road frontage, are to be demolished as part of the proposed redevelopment to erect four new car dealerships. Proposed Automotive Dealership Complex: Development approval for the demolition of existing industrial units and for the construction of four (4) new car dealerships has been approved by the Hills Shire Council. Each dealership will include showroom, office, workshop and external display areas of a modern high specification design. Construction of all dealerships will be similar with the office / showrooms comprising concrete footings and floor, brick and full height glazing to elevations and a metal sheeting roof. Internally the accommodation will provide polished ceramic and carpeted floors, painted gyprock walls and suspended acoustic plasterboard tile ceilings with fluorescent lighting. The office and showroom accommodation will provide package reverse cycle ducted air-conditioning. The buildings when constructed will comprise a total gross lettable area of approximately 10,560 square metres. Construction will be completed in three stages. Development Stage 1 - Holden Dealership: Construction has commenced for the stage 1 Castle Hill Holden dealership which will comprise on completion a total area of 3,10sqm. The accommodation comprises the following areas. Office / Showroom / meeting / amenities 1,210 Workshop, Spare Parts Store 1,370 Canopies 480 Wash bays 130 Gross Lettable Area: 3,10sqm Sydney, NSw Pasific Hwy CASTLE HILL Pasific Hwy M2 Motorway M2 Motorway M2 Motorway M1 Western Motorway M1 Western Motorway SYDNEY Sydney Domestic & International Airport 17

17 Victoria Avenue Information Memorandum AHG Property Syndicate N o. 1 Holden Victoria Avenue Site Plan Showroom Workshop N Display Room & Parking Washbays 2a Victoria Avenue, Castle Hill, NSW Major Multi Level Bulky Goods Center Salisbury Road Norwest Boulevard Windsor Road Hudson Avenue Carrington Road Gladstone Road Hove Avenue Windsor Road Holden 2a Victoria Avenue Packard Avenue 2a Victoria Avenue, Castle Hill, NSW AHG Dealerships Industrial Units AHG Syndicate 18

18 4. Properties 2a Victoria Avenue, Castle Hill, NSW Hyundai - Stage 2 Development Stage 2 - Hyundai Dealership: Construction is to commence soon for the stage 2 Castle Hill Hyundai dealership which will comprise on completion a total area of 3,300sqm. The accommodation comprises the following areas. Office / Showroom / meeting / amenities 1,240 Workshop, Spare Parts Store 1,245 Canopies 65 Wash bays 120 Gross Lettable Area: 3,300 sqm Sydney, NSw Pasific Hwy CASTLE HILL Pasific Hwy M2 Motorway M2 Motorway M2 Motorway M1 Western Motorway M1 Western Motorway SYDNEY Sydney Domestic & International Airport 1

19 Victoria Avenue Information Memorandum AHG Property Syndicate N o. 1 Hyundai Holden N Site Plan Showroom Workshop Display Room & Parking Washbays Victoria Avenue 2a Victoria Avenue, Castle Hill, NSW Major Multi Level Bulky Goods Centre Salisbury Road Norwest Boulevard Windsor Road Hudson Avenue Carrington Road Gladstone Road Hove Avenue Windsor Road Hyundai 2a Victoria Avenue Packard Avenue 2a Victoria Avenue, Castle Hill, NSW AHG Dealerships Industrial Units AHG Syndicate 20

20 4. Properties 2a Victoria Avenue, Castle Hill, NSW Dealership - Stage 3a & 3b Development Stage 3a & 3b - Dealerships 3 & 4: Two further dealerships are planned to commence construction in the middle of 2013 with each dealership having an approximate building area of 2,035 sqm. The accommodation for both dealerships is similar having the following approximate areas:- Office / Showroom / meeting / amenities 1,115 Workshop, Spare Parts Store 550 Canopies 320 Wash bays 50 Gross Lettable Area: 2,035 sqm Industrial Unit Complex When complete, the project will retain 30 industrial units situated to the western portion of the site. The industrial units are up to 25 years of age and construction comprises concrete footings and floor, masonry elevations and a metal roof. The units range in size from 12 sqm - 21 sqm with a total building area of all units of 4,68 sqm. Lease Details: Prior to settlement AHG and a subsidiary company will enter into a formal lease for a term of 15 years with an option for two further periods of 10 years with a commencing rental of $2,210,000 pa. For full lease details see the tenancy schedule on page 30. As each dealership is completed the rent paid by the lessee will be varied by.0% of the agreed value determined by a valuation of the new premises. Similarly, as each dealership is completed the rental paid for the diminishing number of industrial units will be reduced to maintain an overall 8.5% net rental for the industrial Units. See Development Rental Adjustment schedule on page 2. Purchase Price: API has negotiated to purchase 2A Victoria Road, Castle Hill, NSW at a price of $26,000,000. Valuation: Jones Lang LaSalle has undertaken a recent valuation of the property as instructed by API. Their report has assessed the value of the property at $26,000,000. A copy of the valuation summary is included in the annexure to this Information Memorandum. Full report available on request. Sydney, NSw Pasific Hwy CASTLE HILL Pasific Hwy M2 Motorway M2 Motorway M2 Motorway M1 Western Motorway M1 Western Motorway SYDNEY Sydney Domestic & International Airport 21

21 Victoria Avenue Information Memorandum AHG Property Syndicate N o. 1 Industrial Units Holden Site Plan Showroom Workshop Windsor Road Dealership Stage 3a Dealership Stage 3b Victoria Avenue Display Room & Parking Washbays Industrial Units 2a Victoria Avenue, Castle Hill, NSW Major Multi Level Bulky Goods Center Salisbury Road Norwest Boulevard Windsor Road Hudson Avenue Carrington Road Gladstone Road Hove Avenue Windsor Road Industrial Lots Dealership 2a Victoria Avenue Packard Avenue 2a Victoria Avenue, Castle Hill, NSW AHG Dealerships Industrial Units AHG Syndicate 22

22 4. Properties Environmental Investigation Perth Properties AHG instructed GeoEnvironmental Consultants Pty Ltd in January, 2012 to prepare an environmental report on all four Perth properties to determine if there was any likelihood of contamination associated with the land. The report advises the following: The Rockingham properties were historically all undeveloped sites until a car sales showroom and yard developments were constructed on each of the sites from 2004 through to 200. A review of the DEC Contaminated Sites Register indicates that none of the properties are listed as being contaminated or suspected of being a contaminated site. The current use of the properties as car dealerships includes the use of oils and lubricants in bunded enclosures. The Rockingham properties have current level 3 Green Stamp certification issued by the Motor Trade Association in conjunction with the Department of Environment to ensure that the business satisfies the highest standards of compliance to licenses, permits, recycling of liquid waste and spill management strategies. The Midland property was historically used as farming land and then during the 150 s residential buildings were erected on the land. In the 160 s a commercial building was erected on the land for merchant purposes. By the 180 s the land was mostly covered with asphalt and a small commercial building erected in a central position for a car dealership use. Throughout 10 s and 2000 s alterations and additions were made to the commercial building but the use as a car dealership remained. A review of the DEC Contaminated Sites Register indicates that the property is not listed as being contaminated or suspected of being a contaminated site. The current use of the property as a car dealership includes the use of oils and lubricants in bunded enclosures. There is no indication that the site has been used for bulk fuel storage or service station activities. Sydney Property AHG acquired the Castle Hill, Sydney site in June 2010 and commissioned Geotechnique Pty Ltd to undertake a geotechnical and environmental assessment of the land as part of their due diligence activities. Geotechnique undertook soil sample testing to detect if there was any presence of the following: Heavy Metals, TPH & BTEX, Hydrocarbons, Pesticides, Biphenyls, Phenois & Cyanide. The results of the testing were either negligible or concentrations below the benchmark provided by the NSW EPA guidelines. The report confirmed that the site is not likely to present a risk of contamination. Development Approvals API has reviewed all building plans and Development Approvals for all 5 properties and confirms that the improvements erected on the land conform to the approved building plans. 23

23 Information Memorandum AHG Property Syndicate N o ACQUISITION INVESTMENT STRATEGY API is presenting the AHG Property Syndicate No 1 to our clients for consideration as an investment opportunity. The selection of this investment has considered the following:- The portfolio of 5 properties across two states, Perth, Western Australia and Sydney, New South Wales offers investors diversification in two property markets. AHG is Australia s largest automotive group and in the current difficult property market offers secure tenure. The low plot ratio of buildings to the land area provides a significant high ratio of land value to the overall value of each property. The construction of 4 new dealerships in Castle Hill and the recent construction of the Perth properties will provide significant deferred tax benefits. API has a general understanding with AHG to establish further property trusts to enable the recycling of dealership properties to assist in funding AHG s growth plans. DEVELOPMENT AGREEMENT API and AHG have entered into a Master Development Agreement to enable properties acquired by API to be further developed by the lessee. The major undertakings of this agreement are as follows: AHG is the project manager and is responsible for all aspects of the design, statutory approvals, tendering for construction and seeing to the completion of the development. The construction of a new dealership is undertaken by AHG on a turnkey basis which means it funds all development and construction costs until the project is finished and a certificate of occupancy is issued. The Syndicate must then pay AHG for these improvements ( Reimbursement Amount ) with the amount payable calculated as the difference between the as if complete value of the building (i.e. the value of the completed building assessed at commencement of construction) and the most recent as is valuation. This financing structure passes the development risks (particularly those associated with delays and variations to the construction of the buildings) back to AHG. Upon completion of any further development the increased rent is calculated at.0% of the Reimbursement Amount. By way of example, if after completion of a new dealership for a cost of $6,000,000 the as if complete valuation is $35,500,000 and the as is valuation is $30,000,000 the rent is calculated at.0% on the $5,500,000 Reimbursement Amount not the $6,000,000 actual cost of construction. The Syndicate s financier will issue a bank guarantee (or similar) as security for payment of the Reimbursement Amount to AHG. The three stages of construction for the Castle Hill property have been valued by Jones Lang LaSalle to provide an additional $1.0M of value to the property which will require the full amount to be covered by a bank guarantee. Upon the completion of each stage, the Reimbursement Amount (refer to Development Rental Adjustment Schedule see page 2) as determined by Jones Lang LaSalle will be drawn against the bank guarantee. AHG is responsible for all costs incurred by the Syndicate in issuing the bank guarantee. Future buildings to be constructed on any of the sites where AHG is a tenant and the Reimbursement Amount is greater than $500,000 requires a minimum 12 year term following completion of construction i.e. if the remaining lease term was 8 years and 6 and a new building was built with a Reimbursement Amount of $4,000,000, the lease term would be extended 3 years and 6 to effect a minimum 12 year lease term. 24

24 5. ACQUISITION ACQUISITION FUNDS API proposes to acquire the property using investor equity and borrowed funds as detailed in this report. The borrowings will be non-recourse to the investor (i.e. no guarantee required from investors). INVESTMENT IN THE PROPERTY Wholesale investors only Only wholesale investors can apply for units in the trust. An investor investing less than $500,000 in the Syndicate must obtain an Accountant s Certificate that confirms that the investor has net assets of at least $2.5 million or gross income for each of the last two financial years of at least $250,000. The certificate must not be more than 2 years old. Alternatively, an investor who is a person considered by their advisor to have the requisite investing experience and has obtained an Advisors Certificate is eligible to invest. An investment of $500,000 and above does not require an Accountant s Certificate. The minimum number of $1.00 units that can be applied for is 100,000; thereafter investors can increase their investment by multiples of 25,000 units. ie 125,000; 150,000; 175,000 etc. See pages for full details on who can invest, Accountant s Certificate, Advisor s Certificate and the Application Form. TRUSTEE API will be the trustee for the Syndicate. API will also undertake Syndicate and management services on behalf of the Syndicate. API will be the registered proprietor of the land and will hold the property in its capacity as Trustee for the AHG Property Syndicate No 1 Unit Trust. API will have no beneficial interest in the property. SYNDICATE UNIT TRUST A Unit Trust will be created and units will be issued to the unit holders participating in the Syndicate. A copy of the draft Syndicate Unit Trust Deed is provided with this memorandum. PURCHASE PRICE API has negotiated to purchase the five (5) properties at a price of $47.18 million. The terms of the proposed purchase are as follows: Item Purchase Price Particulars $47.18 million (All 5 properties) Execution of Option 2nd February, 2012 Execution of Contract Deposit Up to 0 days from option date $1.0 million upon Execution of Contract Settlement within 45 Days from Execution of Contract (on or about 1st June, 2012) Goods and Services Tax Not applicable as Going Concern provisions of GST Act are applied 25

25 Information Memorandum AHG Property Syndicate N o. 1 VALUATION Jones Lang LaSalle has undertaken a valuation of the properties as instructed by API. Their report has assessed the value of the properties as is at $47.18m. Following the construction of the 4 new car dealerships at the Castle Hill, NSW property, Jones Lang LaSalle have provided a valuation as if complete of $66.18m providing a provision of a further $1.0m of cost to the syndicate to be paid to the seller. The passing yield (the total net annualised income at settlement) is 8.5%. A copy of each property s valuation summary forms part of this Information Memorandum. Full reports available on request. FUNDING Initial Acquisition There will be two sources of funding to meet the project costs of acquiring the property: (a) Investor Equity $38,000,000 (b) Initial Borrowings by Trustee $15,000,000 (c) Provision for construction loans $1,000,000 Total $72,000,000 (a) Investor equity Investors will provide $38,000,000 of investor equity to be used to partly fund the purchase price and the acquisition costs. (b) Borrowings API has received preliminary financing terms from an Australian bank to fund the acquisition of the property. Finance advisor, Cohenca Consulting, has been appointed by API to negotiate acceptable commercial terms for the facility. Indicative terms are as follows: Initial loan principal of $15.0m; Bank guarantee converting to a term loan facility upon issuance of occupancy certificates for any newly built improvements of up to $1.0m; Initial Loan to Value Ratio (LVR) of approximately 32.0%; Fully drawn loan (including construction loan) of approximately 51.0% LVR; Commercial Bill Facility with a term of 3 years; Interest will be paid from the net rental income of the property; The loan will be non-recourse. The lender will secure the loan against the land and buildings only there will be no recourse to the investors; Security A first ranking mortgage to be registered over the land; Anticipated interest rate at settlement is 6.25% pa. INVESTMENT TERM The Syndicate will terminate nine () years from the date that the Syndicate is established. 26

26 5. ACQUISITION SALE OF INVESTMENT Investors are advised that the Syndicate is considered to be a medium to long term investment. In the event of an investor wishing to sell units in the Syndicate, API will use its best endeavours to find a replacement investor but investors are advised that there is no obligation on API to secure a new investor. Investors acknowledge that they will not sell their units in the Syndicate in the first year. MANAGEMENT API as manager of the Syndicate ( the Syndicate Manager ) will manage the Syndicate on behalf of the investors. A leading commercial real estate company will be appointed to manage the property, including collection of rent, payment of outgoings and the day to day management of the property. FEES API will receive a Syndication Fee of 3.25% of the initial purchase price ($47.18m) and also the added value ($1m) of the new automotive dealership complex development at Castle Hill, NSW (to be received at the completion of each stage), for the following services: Establishing the Syndicate; Undertaking due diligence; Negotiating the purchase contract with the seller; and Completing settlement; Management of the proposed automotive dealership complex development at Castle Hill, NSW. An annual Management Fee as set out in the financial forecast is payable to API for its role as Syndicate Manager. The first full financial year management fee is included in the Syndication Fee. SUCCESS FEE As an incentive to maximise investment return to the investors, a success fee may be payable to API when the Syndicate terminates. If the Syndicate terminates at the end of the year term, the Success Fee will be an amount equal to 20% of that portion of the gross selling price of the property that exceeds the forecast termination sale price of $85,300,588. This Success Fee is adjusted pro rata if the Syndicate is terminated, or API is removed as trustee of the Syndicate, before the expiration of the year term. Full details of the Success Fee are set out in the AHG Property Syndicate No 1 Unit Trust Deed. WORKING CAPITAL The Trustee will establish a working capital account for the property to enable payment of any costs not recovered from tenants, including the following: Leasing incentives to incoming tenants, including fit-out contributions; Leasing commissions; Maintaining investor distributions as required from time to time; Payment of annual accounts and quarterly BAS returns; Capital works to the building; and Replacement of any plant and equipment that may become necessary during the Term. 27

27 Information Memorandum AHG Property Syndicate N o AHG - LEASE The acquisition of the 5 properties is on the basis of a sale and lease back. The lease documentation has been prepared with the assistance of the Syndicate s solicitor, Lavan Legal. The main terms of the lease document are summarised below: Lessor Lessee Commencement Date Ltd ATF The AHG Property Syndicate No 1 Unit Trust. AHG Ltd or subsidiary company. Prior to Settlement. Rental Initially 8.5% of the sale price of each property as shown on the tenancy schedule see page 30. Outgoings Maintenance Term Option The lessee pays all normal outgoings for premises of this nature including Property Management fees of 2.0% of the gross annual rental. The lessee is responsible for the upkeep and maintenance of the premises but the lessor shall be responsible for any capital items in need of replacement. Fifteen (15) years. Two further periods each of ten (10) years. Rent reviews The annual rental for each property shall be reviewed each year with an increase of 4.0%, however at the end of the fifth year and tenth years of the initial term and the end of the fifth year of each of the option periods the rent will be reviewed to market rental. A reviewed market rental cannot be lower than the rental paid immediately prior to the rent review, or greater than 15% of the rental paid immediately prior to the rent review. Upon the exercise of a further option of lease term the annual rental shall be reviewed without any restriction at market rate. Redevelopment Lease Guarantee Where a site is redeveloped at a cost of greater than $500,000 the lease term remaining after completion of the works cannot be less than 12 years. Where AHG Ltd is not the lessee it has provided a guarantee in respect of the obligations of the lessee. A copy of the lease document is available upon request by contacting API. 28

28 6. AHG - LEASE Development Rental Adjustment Schedule AHG Property Syndicate No.1 Property Initial Purchase Price As If Complete Value Construction added value Initial rent for New Dealerships Adjusted rent of balance (Industrial Units) Total Rent at completion of stage 2A Victoria Ave, Castle Hill NSW (initial purchase) 2A Victoria Ave, Castle Hill NSW (Stage 1, Holden) 2A Victoria Ave, Castle Hill NSW (Stage 2, Hyundai) 2A Victoria Ave, Castle Hill NSW (Stage 3a & 3b) $26,000,000 $2.210,000 $2,210,000 $32,000,000 $6,000,000 $846,750 $1,03,250 $2,750,000 $3,300,000 $7,300,000 $15,05 $1,645,155 $3,407,000 $45,000,000 $5,700,000 $1,087,450 $1,070,705 $3, Notes: 1. The initial dealership rents are the market rents determined by the Jones Land LaSalle valuation. 2. The above rental calculations assume that no rental review increases have been applied. All rents have been calculated on the initial rents as agreed under the lease 2

29 Information Memorandum AHG Property Syndicate N o. 1 Tenancy Schedule Tenant 1 Carlston Rd, Rockingham WA 10 Smeaton Wy, Rockingham WA 12 Smeaton Wy, Rockingham WA Great Eastern Hwy, Midland WA 2A Victoria Ave, Castle Hill NSW (initial purchase) 2A Victoria Ave, Castle Hill NSW (Holden) 2A Victoria Ave, Castle Hill NSW (Hyundai) 2A Victoria Ave, Castle Hill NSW (Stage 3a & 3b) Area sqm $Rent pa $Rent/ m²pa 3,433 $705,500 $205 1,86 $425,000 $ $27,500 $484 1,712 $372,300 $81 10,560 $2,210,000 $20 3,10 $846,750 $265 3,300 $15,05 $277 4,070 $1,087,450 $267 Commence (Projected) 1-June June June June June July Sep Jan 2014 Expiry (Projected) 31-May May May May May May May May 2027 Term Option Review R/Review Method 15 yrs 10 yrs Every 12 Mths 4.0% 5 yrs 15 yrs 10 yrs Every 12 Mths 4.0% 5 yrs 15 yrs 10 yrs Every 12 Mths 4.0% 5 yrs 15 yrs 10 yrs Every 12 Mths 4.0% 5 yrs 15 yrs 10 yrs Every 12 Mths 4.0% 5 yrs 14 yrs 11 mths 10 yrs Every 12 Mths 4.0% 5 yrs 14 yrs 8 mths 10 yrs Every 12 Mths 4.0% 5 yrs 13 yrs 5 mths 10 yrs Every 12 Mths 4.0% 5 yrs Comments Initial 83 factory units Stage 1 Holden Dealership completion expected 01-Jul 2012 Stage 2 Hyundai Dealership completion expected 01-Sep 2012 Stage 3a & 3b Dealerships 3&4 completion expected 01-Jan

30 7. The Tenant - AHG Automotive Holdings Group Limited Automotive Holdings Group Limited (AHG) is Australia s largest automotive retailing and logistics group, founded in Perth in 152. Today, AHG has 111 high profile dealership franchises throughout Australia and in New Zealand. The automotive retail division generates income from the sale of new and used cars, finance and insurance, service and parts. AHG represents 10 of the top 11 selling manufacturers in Australia by new vehicle sales volume providing a level of protection against shifts in consumer preference. AHG s logistics division operates logistics businesses throughout Australia through the following subsidiaries: Rand Transport and Harris Refrigerated Transport (transport and cold storage), AMCAP (motor parts and industrial supplies distribution), Covs (motor parts and mining supplies), VSE (vehicle storage and engineering), Genuine Truck Bodies (body building services to the truck industry), and KTM Sport motorcycles (motorcycle importation and distribution in Australia and New Zealand). MILESTONES 152 City Motors established as a Holden dealership in Perth 162 City Motors opens second dealership at North City Holden 160s & 70s More dealerships established and acquired in prime locations across Perth 17 AHG acquires AMCAP, one of Western Australia s largest automotive parts distribution centres 186 AHG acquires Rand Refrigerated Logistics 14 AHG granted exclusive Australian distribution rights for KTM Sportmotorcycles 2005 AHG lists on the Australian Securities Exchange 2006 AHG acquires four dealerships in New Zealand 2006 AHG acquires McGrath Lander Group (NSW) 2006 AHG establishes Vehicle Storage & Engineering and Genuine Truck Bodies (Vic) 2007 AHG acquires Zupps Group (Qld) 2007 AHG granted exclusive distributor of Vmoto scooters in Australia 2008 AHG granted exclusive distribution of Kia automotive parts to Kia dealerships in WA 2010 AHG acquires Graeme Werner Toyota dealership (Vic) 2011 AHG acquires Coventry s automotive parts distribution business (WA) 2011 AHG acquires Harris Refrigerated Transport, a national refrigerated freight service based in Adelaide 2011 AHG acquires Diesel Motors Trucks (WA) 2012 AHG to develop Holden dealership in South Melbourne (Vic) 2012 AHG acquires Jeff Wignall Group of dealerships (Vic) Current AHG is Australia s largest automotive retailer with 111 dealership franchise sites (120 after the Jeff Wignall Group acquisition settles) in Australia and New Zealand 31

31 Information Memorandum AHG Property Syndicate N o. 1 AHG FINANCIAL STRENGTH AHG listed on the Australian Stock Exchange (ASX) in November 2005 and has a market capitalisation of approx $550 million. AHG has consistently demonstrated that its level of profitability is in line with, or exceeds industry benchmarks. As a company listed on the ASX, it is under regular public scrutiny and has a strong following in the investment community. AHG s results are independently audited and they are analysed by brokers and reported by the media. AHG reported a record Operating earnings before interest, tax, depreciation and amortisation (EBITDA) of $123.7 million for the year ended 30 June 2011 a 6.7% increase on the previous corresponding period (pcp) while Operating EBITDA margin increased to 3.71% $ $ 000 PCP % Revenue 3, , % EBITDA % EBITDA margin % 3.6% 3.7% EBIT % NPBT (3.0%) NPAT attributable to shareholders (4.%) EPS (6.6%) Interest Cover Source: AHG 2011 Annual Report Strong Balance Sheet FY 2010 FY July 2011 Pro Forma $M $M $M Total Debt Current (34.) (357.1) (357.1) Less finance company floor plan debt ( Less Cash (76.8) (105.0) (58.5) Net Cash Position excluding floor plan debt (67.) (2.) (46.4) Non Current Debt Net Debt Net Debt as a % Total Assets (Less Cash and Floor Plan Debt) 5.06% 2.12%.70% Source: AHG AGM November 2011 presentation 32

32 7. The Tenant - AHG AUTOMOTIVE RETAILING AHG has major automotive operations in Western Australia, New South Wales and Queensland; a growing presence in Victoria; and four dealership franchises in Auckland, New Zealand. Passenger brands Bentley, Chrysler, Citroen, Dodge, Ford, Holden, HSV, Hyundai, Jeep, Kia, Mazda, Mitsubishi, Nissan, Peugeot, Porsche, Subaru, Suzuki, Toyota and Volkswagen. Trucks and commercial vehicles Fuso, Higer, Hino, Iveco, Volkswagen Commercial, Freightliner, UD Trucks and Mercedes Benz (light commercial). 33

33 Information Memorandum AHG Property Syndicate N o. 1 AHG dealership network AHG is the largest automotive retailer in Australia by sales, profitability, market capitalisation and number of employees with 111 dealerships (120 after the Jeff Wignall Group acquisition settles) throughout Australia and New Zealand. Western Australia 47 dealership franchise sites Queensland 38 dealership franchise sites Zupps acquired 2007 Brisbane New South Wales 1 dealership franchise sites McGrath-Lander acquired 2006 Perth Sydney Melbourne Auckland Victoria 3 dealership franchise sites Prestige Hino, Higer Bus Toyota acquired 2010 New Zealand 4 dealership franchise sites Acquired

34 7. The Tenant - AHG LOGISTICS AHG has a substantial logistics division with operations in every mainland state in Australia. Refrigerated Transport and Cold Storage Rand Transport refrigerated transport and cold storage. Rand is Australia s largest provider of refrigerated interstate transport and warehousing services to the food industry, employing more than 300 people at facilities in Perth, Adelaide, Melbourne, Sydney and Brisbane. Operations include three main services national transport, cold storage and refrigerated distribution. Harris Refrigerated Transport refrigerated transport. Purchased by AHG in July 2011, Harris Refrigerated Transport is a national refrigerated freight business based in Adelaide connecting with Perth, Melbourne, Sydney and Brisbane. Established in 176, it employs 20 people across six locations. Harris enhances Rand Transport by offering increased service capabilities for existing customers and a complementary geographic footprint and customer base. Automotive Parts AMCAP automotive parts and accessories distribution. AMCAP has been a major distributor of automotive parts in Western Australia and Australia for 44 years. AMCAP has achieved significant growth over the past 30 years adding strength to its portfolio of franchises which now include Mitsubishi, Holden, HSV, Subaru, Hyundai, Kia, Ford, PPG Automotive Refinish, 3M Products, Iveco, Fuso, AMCAP Truck and Trailer Parts. Covs automotive parts and mining supplies distribution. Covs sells genuine automotive parts and a full range of aftermarket parts and accessories to the automotive, mining and industrial sectors in Western Australia. The acquisition provides AMCAP with the ability to expand its customer base and supply a broader range of products to its existing customers. Motorcycle Distribution KTM Sportmotorcycles motorcycle importation and distribution in Australia and New Zealand. KTM is a prestigious Austrian off-road and on-road motorcycle manufacturer founded in 134 with a rich racing heritage that has enjoyed considerable success in motor sport with multiple state, national and MX World titles. The bikes have a distinctive branding strategy that resonates well in the Australian and New Zealand markets. Storage and Engineering VSE and GTB - Vehicle Storage and Engineering (VSE), located in Dandenong, Victoria, provides truck storage and distribution logistics as well as engineering services to the Australian rigid truck market. The engineering business specialises in truck modification services such as chassis modification, lazy axle and turntable accessory fitment and dual control conversions. Genuine Truck Bodies (GTB), also located in Dandenong, provides body building services to the truck industry. Together, VSE and GTB provide a one-stop shop for vehicle modification and body building services. 35

35 Information Memorandum AHG Property Syndicate N o. 1 AHG BENEFITS FROM DUAL REVENUE STREAMS $M Revenue $M Operating EBITDA Logistics Auto Logistics Auto Source: AHG AGM November 2011 presentation New Vehicle Sales Remain Solid The Australian new motor vehicle market finished above one million calendar year sales in 2011 for only the 4th time in history despite challenging market conditions and significant supply shortages during the year due to the effects of natural disasters. Official VFACTS data released on the 5th January 2012 by the Federal Chamber of Automotive Industries shows that a total of 1,008,437 new passenger cars, SUVs and commercial vehicles were delivered to customers during New Vehicle Sales CY 2011 Source: VFacts History The new vehicle market has started the year with a solid result. Official VFACTS data released 3 February 2012 by the Federal Chamber of Automotive Industries (FCAI) shows that 76,783 passenger cars, SUVs and commercial vehicles were sold in January (up 4.3 per cent or 3,1 vehicles compared to the same month in 2011). 36

36 8. ACQUISITION COSTS Item Net Amount GST Purchase Price $47,180,000 Stamp Duty (WA & NSW) $2,500,175 Registration Fee Transfer of Land (WA & NSW) $,751 Legal - Purchase Contract, JVA, Loan docs & Settlement $125,000 $12,500 Professional Fees - Valuation, Building & Financial Reports $0,000 $,000 Marketing Costs $20,000 $2,000 Borrowing Costs $186,500 $0 Initial Syndication Fee $1,533,350 $153,335 Further Syndication Fee $617,500 $61,750 Working Capital $737,724 Initial Cost $53,000,000 $238,585 Reimbursement Amount Stage 1 Castle Hill (Holden) $6,000,000 Reimbursement Amount Stage 2 Castle Hill (Hyundai) $7,300,000 Reimbursement Amount Stage 3a & 3b Castle Hill $5,700,000 Total Cost $72,000,000 $440,120 Notes on Acquisition Costs Legal costs Professional fees Marketing costs Borrowing costs include documenting the Option, Contract of Sale, Development Agreement, Lease preparation, Unit Trust, Finance Documentation and completing Settlement. relate to costs for the valuations provided by Jones Lang LaSalle and BDO s accounting fees for the preparation of the depreciation schedule and accounting advice. printing and distribution of the Information Memorandum and marketing brochures including mail expenses. relates to bank establishment fees, bank legal fees and finance advisory services provided by Cohenca Consulting. Initial Syndication fee the fee paid to API for sourcing the property and establishing the Syndicate. The fee is 3.25% of the purchase price. Further Syndication Fee this fee is treated the same as the syndication fee but is only payable when the further development has been completed. For example stage 1 Holden dealership at Castle Hill on completion is $6,000,000 part API Syndication fee is $15,000 with the balance of the fee only payable when the further stages are completed. Working Capital GST Reimbursement Amount the working capital fund is a cash reserve to enable the syndicate to operate the cash flows of the income and expenditure. Interest payments are deducted from this account together with any unforseen expenses that are not budgeted. The working capital balance shown above is higher than necessary but a provision for possible additional stamp duty assessment for the Castle Hill property may require up to $400,000 for stage 1 and 2 depending on the completion of the construction of the new dealerships. API will pay the GST and will be reimbursed following the lodgement of a BAS statement. the three stages of further construction totalling $1.0m will be secured by a bank guarantee that can be drawn upon by AHG delivering the Syndicate an occupancy certificate. 37

37 Information Memorandum AHG Property Syndicate N o. 1. FORECAST CASH DISTRIBUTION FINANCIAL FORECAST Initial Loan Funds LVR 32% $15,000,000 Loan Draw Down Stage 1 (Holden) LVR 3% $6,000,000 Loan Draw Down Stage 2 (Hyundai) LVR 47% $7,300,000 Loan Draw Down Stage 3a & 3b LVR 51% $5,700,000 Total Loans 51% $34,000,000 Required Equity $38,000,000 Year 1* Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year Year 10 Financial Year Income $334,11 $5,115,156 $5,61,853 $6,186,287 $6,433,738 $6,702,643 $7,07,868 $7,381,782 $7,677,053 $7,84,135 Dividend Establishment $30,000 Total Income $364,11 $5,115,156 $5,61,853 $6,186,287 $6,433,738 $6,702,643 $7,07,868 $7,381,782 $7,677,053 $7,84,135 Less Other Expenses Interest on Purchase Price Interest - Stage 1 Castle Hill (Holden) Interest - Stage 2 Castle Hill (Hyundai) Interest - Stage 3a&3b Castle Hill Management Fee Total Other Expenses $77,875 $34,500 $34,500 $34,500 $72,000 $72,000 $72,000 $72,000 $72,000 $72,000 $373,800 $373,800 $373,800 $388,800 $388,800 $388,800 $388,800 $388,800 $388,800 $341,03 $454,70 $454,70 $473,040 $473,040 $473,040 $473,040 $473,040 $473,040 $177,555 $355,110 $36,360 $36,360 $36,360 $36,360 $36,360 $36,360 $0 $0 $167,10 $182,45 $18,75 $17,728 $20,387 $217,763 $226,473 $235,532 $77,875 $1,64,33 $2,108,555 $2,300,65 $2,32,5 $2,400,28 $2,412,587 $2,420,63 $2,42,673 $2,438,732 Cash Distribution to Investors $286,316 $3,465,764 $3,583,28 $3,885,51 $4,040,743 $4,301,715 $4,685,281 $4,60,81 $5,247,380 $5,545,403 Annual Return to Investors.0%.1%.4% 10.2% 10.6% 11.3% 12.3% 13.1% 13.8% 14.6% Forecast Nine Year Average Return 11.4% *part financial year - 1 month June,

38 . FORECAST CASH DISTRIBUTION CASH FLOW ASSUMPTIONS 1. Initial Returns The cash flow commences at settlement which is expected to occur on or about 1 June, Net Income and Rent Reviews The Jones Lang LaSalle valuation has provided market forecasts relating to rental growth, vacancies and incentives and these forecasts have been considered in the cash flow. Jones Lang LaSalle has advised in their opinion, the percentage increase in CPI over the next three years will average 2.5% pa. 3. Dividend Establishment The cash flow has calculated that in the last month of financial year 2011/12 (June) the projected dividend will fall below a target of.0%. To stabilise the target dividend return the cash flow above has allowed for approximately $30,000 from the reserve capital account to be drawn upon to provide a.0% dividend return to investors. 4. Outgoings Tenants pay outgoings in accordance with their leases. All leases include the payment of outgoings by the tenant including property management fees. 5. Loan Interest Borrowing arrangements are not finalised, but a funding proposal has been received from an Australian bank to provide a three year interest only loan of $15.0 million, representing a 32% LVR to facilitate settlement (initial loan) and $1m bank guarantee facility (converting to term debt as new construction is completed). Interest associated with further loans of $1.0m taking total borrowings up to $34.0M by early 2014 is also provided in the cashflow. The syndicate will provide the seller with a bank guarantee for these additional loans and drawdown by the seller will be undertaken on a turnkey basis following the provision by the seller of an occupancy certificate after completion of the development. To facilitate the payment of construction costs for stage 1, stage 2 and stages 3a & 3b the cash flow assumes the following draw down dates on the bank guarantee. Stage Bank Guarantee Amount draw Down Date Stage 1 - Holden $6,000, July-2012 Stage 2 Hyundai $7,300, Sept-2012 Stage 3a & 3b $5,700, Jan-2014 At the date of preparation of this report indicative variable interest rates are 6.25% pa. The forecast cash distribution schedule above has adopted 6.25% pa as the likely interest rate at settlement when the loan facility will be drawn. The forecast has also allowed for an increase in the interest rates from year four onwards. The rate adopted in year four to nine is 6.5% pa. Future extensions of the loan facility are based on 3 year terms. 6. Syndicate Management Fee The Syndicate Management Fee is for administration of the Syndicate and the overseeing of the property s management activities. The first full financial year management fee is included in the Syndication Fee. 7. Cash Distribution The cash distribution is the cash available to be distributed to investors after receiving all income from the property and making payments of interest and other expenses of the property. The annual percentage is calculated by dividing the available cash by the sum of all equity. 3

39 Information Memorandum AHG Property Syndicate N o FORECAST CAPITAL RETURN Termination Sale Price $85,300,588 Less Equity $38,000,000 Selling Costs $853,006 Debt Repayment $34,000,000 Winding Up Costs $10,000 API Success Fee $0.00 Capital profit after nine years syndicate hold $12,437,582 Nine year capital growth on equity participation 32.7% Average annual capital growth on equity participation 3.6% Combined average annual income return & average annual 15.0% capital growth over syndicate hold FORECAST RETURN ASSUMPTIONs The Termination Sale Price of the property is calculated on the basis of applying a net income return ( yield ) of 8.75% on the total net income estimated at the end of year nine of the Syndicate Term. Selling costs include agent fees, settlement costs and legal expenses. For the purposes of forecast returns working capital is assumed to be expended in total. Repayment of the borrowed funds is assumed to be the same principal amount as at the commencement of the Syndicate. API will only receive a success fee if the sale price exceeds the above forecast termination sale price. ANNUAL CASH DISTRIBUTION An investment of $100,000 in the Syndicate is forecast to deliver to investors the following annual cash distribution over the nine year term of the syndicate. Year % Return $ Return 2011/12*.0% $ /13.1% $, /14.4% $, / % $10, / % $10, / % $11, / % $12, /1 13.1% $13, / % $13, /21* 14.6% $13,380 * Annualised return for part financial year Av. 11.4% $103,30 Forecast Cash Return - $103,30 (average 11.4% per annum) Forecast Capital Gain - $32,700 (average 3.6% per annum) Total Forecast Return (Cash & Capital Gain) - $136,630 (average 15.0% per annum) Total Forecast Return (including contributed equity) - $236,

40 11. TAXABLE INCOME PROJECTIONS API has engaged the services of Napier and Blakely, Quantity Surveyors to prepare a report for determining tax depreciation allowances in accordance with the Income Tax Assessment Act 17 and Tax Ruling 2010/2. This report has been used to provide the following schedule showing annual tax deferral allowances within the forecast cash flow. Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year Year 10 Financial Year Cash Surplus $286,316 $3,465,764 $3,583,28 $3,885,51 $4,040,743 $4,301,715 $4,685,281 $4,60,81 $5,247,380 $5,545,403 Less Tax Deductions Depreciation $72,04 $870,716 $718,277 $53,306 $482,42 $3,472 $336,28 $286,777 $247,47 $215,44 Building Allowance Business Capital Costs Borrowing costs Total Tax Deductions $6,6 $1,300,423 $1,31,872 $1,455,61 $1,455,61 $1,455,61 $1,455,61 $1,455,61 $1,455,61 $1,455,61 $306,670 $306,670 $306,670 $306,670 $306,670 $0 $0 $0 $0 $0 $3,108 $37,300 $37,300 $37,300 $37,300 $34,12 $0 $0 $0 $0 $478,76 $2,515,10 $2,454,11 $2,33,237 $2,282,423 $1,88,625 $1,72,25 $1,742,738 $1,703,441 $1,671,410 Net Taxable Income -$12,480 $50,655 $1,12,180 $1,42,354 $1,758,320 $2,412,00 $2,83,022 $3,218,081 $3,543,3 $3,873,3 Loss Applied $12,47.6 -$12,47.6 Tax Advantaged Distribution 100.0% 78.1% 68.5% 61.6% 56.5% 43.% 38.3% 35.1% 32.5% 30.1% Notes to Taxable Income Projections: Tax advantaged distribution is the percentage of the cash for distribution paid to investors that is tax free or tax deferred. This will result in decreased taxable income, i.e. this component of the cash distribution is deferred until the property is sold. Chartered Accountants, BDO have provided a report to API showing a comparison of the following options: $100,000 investment in a bank term deposit account (net cash after tax return) $100,000 investment in AHG Property Syndicate No.1 (net cash after tax return) Assumptions: Note the calculations have been prepared on the basis of a 1 June 2012 start date. Prepared ignoring any capital growth in the property Prepared ignoring any cost base adjustment Assuming a tax rate of 46.5% Term deposit interest rate of 5.0% 41

41 Information Memorandum AHG Property Syndicate N o. 1 $100,000 Investment in Bank Term Deposit Account Below is a table which sets out the after tax net return earned on a bank term deposit of $100,000. Details Year 1* Year 2 Year 3 Year 4 Year 5 Term Deposit Account $100,000 $100,000 $100,000 $100,000 $100,000 Interest 5.0% p.a. $417 $5,000 $5,000 $5,000 $5,000 Tax 46.5% ($14) ($2,325) ($2,325) ($2,325) ($2,325) Net Income after Tax $223 $2,675 $2,675 $2,675 $2,675 $100,000 Investment in AHG Property Syndicate Below is a table which sets out the after tax net return earned by investors participating in the Syndicate. Details Year 1* Year 2 Year 3 Year 4 Year 5 Forecast Return $750 $,100 $,400 $10,200 $10,600 Less: Tax advantaged Distribution 100% 78.1% 68.5% 61.6% 56.5% $750 $7,107 $6,43 $6,283 $5,8 Taxable Income 0 $1,3 $2,61 $3,17 $4,611 Tax 46.5% 0 ($26) ($1,376) ($1,821) ($2,144) Net Income after Tax $750 $8,174 $8,024 $8,37 $8,456 The first line in the table below shows the annualised interest yield that needs to be achieved by investing $100,000 in a term deposit to achieve the same after tax net income as $100,000 invested in the AHG Property Syndicate. Details Year 1* Year 2 Year 3 Year 4 Year 5 Term deposit interest rate *16.8% 15.28% 15.00% 15.66% 15.8% Annual interest return 1,400 15,280 15,000 15,660 15,800 Tax 46.5% 650 7,106 6,76 7,281 7,347 Net Income after Tax $750 $8,174 $8,024 $8,37 $8,453 *note only 1 month s income ie commencement 01-Jun,

42 12. RISK FACTORS INTEREST RATES Interest rates may rise or fall during the term of the investment. The forecast interest rate in the income cash flow has assumed an initial interest rate of 6.25% pa. The forecast cash distribution schedule above has adopted 6.25% pa as the likely interest rate at settlement when the loan facility will be drawn. The forecast has also allowed for an increase in the interest rates from year four onwards. The interest rate adopted in year four onwards is 6.5% pa. An extension of the loan facility is based on a further 3 year terms. MARKET CONDITIONS The value of any investment in real property is determined by the market at any particular point in time. History has shown that real estate values fluctuate. An investment in the Syndicate may be adversely influenced by the following factors: A downturn in the property market in general; A downturn in the Australian or Western Australian and New South Wales economies; A downturn in the demand for showroom accommodation. FORECAST RETURNS ARE NOT REALISED This Information Memorandum contains forecasts based on many factors beyond the control of API. The forecast assumptions are based on the following external information: Market and CPI forecast figures provided by the Jones Lang LaSalle valuation; REGULATORY CHANGES The introduction of new, or the amendment of existing, legislation may have a detrimental effect on an investment in property. Future taxation reforms may happen during the term of the investment, which may adversely affect income return by, for example, altering depreciation rates applicable to the asset for income tax purposes. LEASING RISK The value of investment property is to a large extent dependent on the leases in place. The Syndicate is wholly dependent upon the tenant(s) of the property continuing to occupy the premises and comply with the terms and conditions of the leases. In the event a lease term expires during the Term or a lessee vacates the property, there may be a period of vacancy which will reduce rental income and incur re-letting costs which will be payable by the Syndicate. Whilst the leases impose legally enforceable obligations on tenants, a tenant may still default resulting in costs being incurred for legal proceedings and if necessary, for re-letting of the premises VALUATION RISK The property may from time to time need to be valued. A valuation may result in a reduction in the value of the property due to loss of income from tenants or market factors significantly reducing the demand for showroom property. These factors are beyond the control of the Syndicate Manager. 43

43 Information Memorandum AHG Property Syndicate N o RISK FACTORS WORKING CAPITAL ACCOUNT The Syndicate Manager will establish a working capital account to pay any unforeseen expenses. In the event that the account is exhausted, the Syndicate Manager may be required to reduce income distributions to investors or require a capital contribution from investors to provide for any shortfall in recurring expenses (e.g. interest payments). UNEXPECTED CAPITAL EXPENDITURE In the event of unexpected capital expenditure, the Syndicate will use cash reserves from the Syndicate working capital account. Should expenditure be greater than the amount held in cash reserves, the Syndicate may borrow against the unencumbered equity of the property. ILLIQUID INVESTMENT There is no established secondary market for the sale of a share in the Syndicate. You may arrange for your own private sale or consider offering your Units to the other Unit Holders in the Syndicate. Whilst API will assist in a sale of an interest, there is no obligation on API to have your interest redeemed. Investors warrant that they will not sell their units in the Unit Trust in the first year. BUILDINGS ARE DESTROYED Should the buildings be destroyed by fire or an act of nature, a comprehensive insurance policy taken out with a reputable insurer will cover replacement of buildings, including removal of debris and loss of rental income. FINANCING RISK If the property suffers a significant reduction in value, or there is a significant rise in interest rates, the Syndicate may then be in breach of loan covenants relating to loan to value ratios ( LVR ) or interest rate cover requirements. If either or both of these events were to occur, the Syndicate may be required to contribute additional equity. 44

44 13. THE TRUSTEE AND SYNDICATE MANAGER AUSTRALASIAN PROPERTY INVESTMENTS LTD ( API ) API is a leading West Australian property syndicator and manager specialising in commercial property investment with a proven track record of delivering strong income returns and capital growth. Since 2001, API has successfully managed 15 commercial property syndicates with a value in excess of $400 million. API is the holder of an Australian Financial Services Licence (Licence No 23875) issued by the Australian Securities and Investment Commission (ASIC) to provide general product advice to wholesale clients for interests in its managed investment schemes. API discloses the following potential conflicts of interest: POTENTIAL CONFLICTS OF INTEREST Peter Dicey Hughes is the managing director of API and is also a director of Hughes Advisory Pty Ltd which provides property asset management services to API and a related entity of Peter Dicey Hughes may be a participant in the Syndicate. Hersh Solomon Majteles is a director of API, and is a partner in the law firm Lavan Legal which provides legal services to API and a related entity of Hersh Solomon Majteles may be a participant in the Syndicate; Joseph Evangelista is a director of the Trustee and is a partner in the accounting firm BDO which provides accounting services to API. 45

45 Information Memorandum AHG Property Syndicate N o THE TRUSTEE AND SYNDICATE MANAGER Property Portfolio Listed below is a selection of properties included in API s property portfolio: 50 Kings Park Road Purchase price: $28.25m Acquired: 2011 Major tenants: Allion Legal, Molly Mines, Icon Engineering 30 The Esplanade, Perth Purchase price: $50 million Acquired: 2011 Major tenants: Minara Resources, Toll Energy Logistics, Kinetic IT Floreat Forum Shopping Centre Purchase price: $100 million Acquired: 200 Major tenants: Woolworths, Coles, Best and Less and 76 specialty stores 115 Cambridge Street, West Leederville Purchase price: $27.1 million Acquired: 2008 Office and retail complex Major tenants: Coles, Australand Sheffield House, Hay St, Perth Purchase price: $.86 million Acquired: 2005 Hay Street Mall, CBD location Major tenants: JB Hi-Fi, CCN Architects, The Minister for Housing and Works 366 Eddystone Avenue, Joondalup Purchase price: $8.6m Acquired: 2003 Showroom development property Major tenant: Spotlight 46

46 14. Information on how to invest WHO CAN INVEST? Wholesale clients only. Investors should generally fall within one of the categories below to be able to participate in the Syndicate. The main categories 1. Invest at least $500,000 at one time 2. The investor has an accountant s certificate that shows that they have net assets of at least $2.5 million or gross income for each of the last two financial years of at least $250,000. The certificate must not be more than 2 years old. See Accountants Certificate on page The investor is a company or trust controlled by someone who has an accountant s certificate as mentioned in number The investor is a person considered by their advisor to have the requisite investing experience. See Advisor s Certificate on page 53. HOW DO I INVEST? To be considered for Units in the Syndicate, Applicants must complete the attached Application Form and send it to us with your cheque. If you are a new API investor, you will need to download the appropriate identification form from our website, we will send you the correct form to you in any case, for completion and return to us prior to the close of the offer. Joint Applications must be signed by all Applicants. Joint Applicants will be deemed to be holding their syndicate interests as joint tenants, unless otherwise advised. WHAT IS THE CUT OFF DATE FOR INVESTING? The earlier of 30 March, 2012 or when we raise a minimum of $38m in equity. The Application Form should be returned as early as possible to avoid exclusion from the Syndicate if there is an over subscription by investors. HOW DO I PAY? Write an Australian cheque payable to: Lavan Legal Trust Account and crossed Not Negotiable. The completed Application Form, together with a cheque for a deposit amounting to four percent (4.0%) of the total investment amount should be forwarded to your financial advisor or: Ltd PO Box 472 Subiaco WA

47 Information Memorandum AHG Property Syndicate N o. 1 HOW TO COMPLETE THE APPLICATION FORM To invest in the Syndicate: you must be a wholesale client use the accountant s certificate or advisors certificate if relevant. you must complete and sign the Application Form. if you are a new API investor you must complete the correct Identification form and send us the required documents. The form for trustees, companies and individual investors is available from our website and we will send you the correct form in any case. attach to the application form your bank or personal cheque payable to Lavan Legal Trust Account. send your cheque and Application Form to Ltd. Note that only legal entities are allowed to hold securities. Please follow the guide below to ensure your Application Form is filled in correctly. TYPE OF INVESTOR Individual Use given names, not initials CORRECT FORM OF REGISTRABLE TITLE John Alfred Smith INCORRECT FORM OF REGISTRABLE TITLE JA Smith Company Use Company title, not abbreviations XYZ Pty Ltd XYZ P/L XYZ Co Trusts with Individual as Trustee Use trustee(s) personal name(s) and trust name Sue Smith as trustee for the Sue Smith Family Trust Sue Smith Family Trust Trusts with Company as Trustee Use trustee(s) Company title and trust name XYZ Pty Ltd as trustee for the Sue Smith Family Trust Sue Smith Family Trust Superannuation Funds Use name of trustee of fund and fund name. Do not use the name of the fund only Jane Smith Pty Ltd as trustee for the Jane Smith Pty Ltd Superannuation Trust Jane Smith Pty Ltd Superannuation Fund To enable immediate registration of your interest, you may wish to forward a copy of the Application Form to API by fax, or info@austpropinvest.com.au 48

48 15. Forms Application Form Accountant s Certificate Adviser s Certificate 4

49 Information Memorandum AHG Property Syndicate N o. 1 Application Form (Section 761G(7)(c) of the Corporations Act 2001) Please choose one applicant type at sections 1, 2, 3 or 4, before completing sections 5 to 1. individual Applications Applicant 1: Full Name: Applicant 2: Full Name: 2. Company Applicants Full Company Name: 3. Trust applicants (SMSF) with individual as trustee Trustee (Individual/s) Name: Trust or Fund Name: 4. Trust applicants (Incl SMSF) with company as trustee Trustee (Company) Name: Trust or Fund Name: 5. Contact details Contact Name: Residential Number / Street (PO Boxes not accepted: Residential Suburb / Town: State: Post Code: Mailing Address (if different from above): Suburb / Town: State: Post Code: Day-time Phone: Mobile Phone: ( ) 50

50 Application Form (Section 761G(7)(c) of the Corporations Act 2001) 6. Application for units Number of Units requested: $1 per Unit = $ Deposit of 4.0% with this application: = $ Balance payable by 30th March 2012 = $ 7. Financial Details (Distributions will be paid by direct transfer to the following account) Account Name: Name of Bank: BSB Number: Account Number: TFN: 8. Applicant Acknowledgement (By completing this Application Form the Applicant/s) Acknowledges that subscription is subject to investment risks including the possible loss of capital invested; Declares that they have the Memorandum to which this Application Form is attached; Acknowledges that it has read and agreed to the matters contained in the Memorandum and received a copy of the Trust Deed; Agrees that it will rely entirely upon its own due diligence or professional advice in considering this investment; Declares that it is a Sophisticated Investor for the purposes of section 708(8) of the Corporations Act; Acknowledges that the Trustee is entitled to accept or reject this Application in whole or in part; Acknowledges that the Trustee is entitled to withdraw the Invitation at any time and for any reason prior to the date on which the subscription list closes as set out below; Acknowledges that the privacy notification in this Memorandum has been read, understood and agreed to and that personal information may be used, disclosed and otherwise handled in the manner referred to; Agrees to provide all information and identification materials that may be required at any time for the purpose of complying with obligations under the Anti-Money Laundering and Counter-Terrorism Financing Act 2006; Acknowledges that its name will be placed on the register of Syndicate members for the number of Units allocated by API (in its discretion) pursuant to this Application; Acknowledges that no particular return on investment is guaranteed by API, and understands that an investment in this Syndicate is subject to the risks outlined in this memorandum.. Signature If Applicant is an Individual or Partnership: If Applicant is a Company: Execution by the company in accordance with its Constitution and the Corporations Act in the presence of: Applicant 1: Signature Director: Signature Print Name: Print Name: Date: Date: Applicant 2: Signature Director/ Secretary: Signature Print Name: Print Name: Date: Date: This Memorandum is dated Feb 2012 This Information Memorandum has NOT been lodged with the Australian Securities and Investments Commission ( ASIC ) and the Invitation contained in this Information Memorandum does not require disclosure to investors under Part 6D.2 of the Corporations Act. Dealer Name: Adviser Name: Contact No: Adviser Identification 51

51 15. Forms Information Memorandum AHG Property Syndicate N o. 1 Accountant s Certificate (Section 761G(7)(c) of the Corporations Act 2001) Accountant s can use this form to certify that an applicant is a sophisticated investor ACCOUNTANT S DETAILS Title: First Name: Last Name: Street Number: Street Name: Suburb: State: Post Code: Business Phone: Mobile Phone: ( ) Company Name: I, being a qualified accountant, certify that in accordance with the requirements of Section 708(8)(c) and Section 761G(7)(c) of the Corporations Act that the following Investor: INVESTOR DETAILS Please fill in the investor s name e.g. Brian Smith or Smith Pty Ltd or Brian Smith ATF Smith Family Super Fund Investor Name: Has net assets in excess of $2.5 million; or Had a gross income in excess of $250,000 per annum for each of the last two financial years Accountant s signature: Date: / / By signing above the Accountant certifies that they are one of the following: A member of the Australian Society of Certified Practising Accountants who is entitled to use the post-nominals CPA or FCPA and is subject to and complies with the Society s continuing professional development requirements; or A member of the Institute of Chartered Accountants in Australia who is entitled to use the post-nominals ACA, CA or FCA, and is subject to and complies with the Institute s continuing professional education requirements; or A member of the National Institute of Accountants who is entitled to use the post-nominals MNIA, FNIA, PNA or FPNA and is subject to and complies with the Institute s continuing professional education requirements; or A member of an Eligible Foreign Professional Body. You will satisfy the criteria for a qualified accountant if you are a member of an eligible foreign professional bodies and you: Have at least three years practical experience in accounting or auditing, and Are only providing a certificate for the purpose of s708(8)(c) and s761g(7)(c) to a person who is a resident in the same country (other than Australia) as yourself. 52

52 15. Forms Adviser s Certificate (Section 761GA of the Corporations Act 2001) Advisers can use this form to certify an applicant is a wholesale client and so able to invest. Adviser s Details Title First Name Last Name Street Number Street Name: Suburb State Post Code Business Phone Mobile Phone ( ) Dealer Name Dealer AFSL Number investor Details Please fill in the investor s name e.g. Brian Smith or Smith Pty Ltd or Brian Smith ATF Smith Family Super Fund Investor Name Investor s Signature Date / / By signing above the investor acknowledges that before investing they: Have not been given a product disclosure statement nor any other document that would be required to be given to the client under the relevant chapter of the Corporations Act if interests in the relevant trust were provided to the client as a retail client; Have no other obligation to them under the relevant chapter of the Corporations Act that we or they would have if the relevant trust was provided to the client as a retail client; Wish to be treated as a sophisticated investor/s under the Corporations Act; and Will not be afforded by law the additional disclosure protections that apply to retail clients. Adviser Certification As the holder of an AFSL or on behalf of the licensee identified above, I certify that I am satisfied on reasonable grounds that the applicant has previous experience in using financial services and investing in financial products that allows the applicant to assess: The merits of the Trust The value of the interest The risks associated with holding interests in the Trust The applicant s own information needs and The adequacy of the information given by us in the Information Memorandum for the Trust. I confirm that the applicant has been given a written statement of my reasons for being so satisfied. Adviser s signature Date / / 53

53 Information Memorandum AHG Property Syndicate N o. 1 Annexures Annexure A: Jones Lang LaSalle Valuations dated February, Smeaton Way, Rockingham WA 12 Smeaton Way, Rockingham WA 1 Calston Road, Rockingham WA Great Eastern Highway, Midland WA 2a Victoria Avenue, Castle Hill NSW 54

54 Executive Summary Challenger Ford 10 Smeaton Way, Rockingham The subject property comprises of a modern motor vehicle dealership improved with offices, showrooms, vehicle display yards, spare parts area, workshop and wash & detailing bays. The improvements have a lettable area of 1,86.square metres and a further 1,730 square metres of display yard area, constructed upon a 7,52 square metre site. Valuation Prepared For Limited & Commonwealth Bank of Australia Valuation Purpose Acquisition & First Mortgage Security Purposes Date of Valuation 1 February 2012 Interest Valued 100% Freehold Interest Valuation Approach Capitalisation Approach & Discounted Cash flow Approach Adopted Value $5,000,000 (Five Million Dollars) plus GST Property Particulars Financial Summary Gross Lettable Area Total GLA 1,86 sqm Net Passing Income $415,870 ($112/sqm) Warehouse 16 sqm Net Market Income $415,870 ($112/sqm) Office Display Yard 685 sqm 1,730 sqm Other 385 sqm Weighted Average Lease Term (by Income) years Adopted Vacancy (% Total GLA) 0.00% Weighted Average Lease Term (by Area) years Site Coverage 26.16% Site Area 7,52 sqm Cap Approach Assumptions DCF Approach Assumptions Adopted Cap Rate 8.50% Discount Rate 10.00% Discount Rate for PV of Adjustments 8.50% Terminal Yield 8.75% Adopted Cap Rate (Other Income) 8.50% Adopted Lease Term 5.0 years Long Term Vacancy Allowance 0.00% Prime Industrial Growth Rate (Avg. 10yr) 3.17% Allowances for Expiries Occurring within 12 CPI (Avg. 10yr) 2.67% Allowances for Capex Occurring within 12 Value based on DCF Approach $5,141,745 Value based on Capitalisation Approach $4,878,135 Valuation Summary Valuer/s Adopted Value $5,000,000 Name David Ivey AAPI Registration No Rate/sqm of GLA $1,346/sqm Equivalent Yield 8.2% Name Graham Kennedy FAPI Initial Yield (Passing) 8.32% Registration No. 43 Initial Yield (Fully Leased) 8.32% IRR (10 yr) 10.41% Date 7 February 2012 This is a summary only. It must not be relied on for any purpose. Jones Lang LaSalle s valuation of this asset is subject to assumptions, conditions and limitations. Those are set out in the full valuation report prepared in relation to the asset. Liability limited by a scheme approved under Professional Standards Legislation. 55

55 Executive Summary Financial Details & Critical Analysis Tenancy Overview Tenant Net Income Area (sqm) % GLA Office/Showroom $422,720 3, % Total $422,720 3, % Tenant by Lettable Area Challenger Ford 100% Projected Net Cash Flow $600,000 $500,000 $400,000 $300,000 $200,000 $100,000 $0 Adopted Growth Rates Industrial 3.20% 3.0% 3.10% 2.0% 3.10% 3.30% 3.00% 2.80% 3.20% 3.20% Capex 2.70% 3.40% 2.60% 2.40% 2.60% 2.80% 2.50% 2.30% 2.70% 2.70% CPI 2.70% 3.40% 2.60% 2.40% 2.60% 2.80% 2.50% 2.30% 2.70% 2.70% This is a summary only. It must not be relied on for any purpose. Jones Lang LaSalle s valuation of this asset is subject to assumptions, conditions and limitations. Those are set out in the full valuation report prepared in relation to the asset. Liability limited by a scheme approved under Professional Standards Legislation. 56

56 Executive Summary Financial Details & Critical Analysis Cash Flow Year Car Yard Letting Up & Incentive Allowances Down Time Probability 75% 75% 75% 75% 75% 75% 75% 75% 75% 75% Incentives 10% 10% 10% 10% 10% 10% 10% 10% 10% 10% Annualised Letting Up & Incentive Allowances Down Time $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Incentives $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Agents Fees $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 T otal $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Annualised Capex Allowances Budgeted Capex $15,000 $15,405 $15,2 $16,343 $66,41 $17,170 $17,651 $18,02 $18,508 $76,033 Capex on Expiry $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Sinking Fund $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 T otal $15,000 $15,405 $15,2 $16,343 $66,41 $17,170 $17,651 $18,02 $18,508 $76,033 Valuer Jones Lang LaSalle David Ivey Graham Kenney FAPI Certified Practising Valuer (Reg No. 4434) Certified Practising Valuer (Reg. No. 43) Associate Director, Valuations and Advisory, WA Director, Valuations and Advisory, WA This is a summary only. It must not be relied on for any purpose. Jones Lang LaSalle s valuation of this asset is subject to assumptions, conditions and limitations. Those are set out in the full valuation report prepared in relation to the asset. Liability limited by a scheme approved under Professional Standards Legislation. 57

57 Executive Summary 12 Smeaton Way, Rockingham The subject property comprises of a small motor vehicle dealership improved with offices, showroom, vehicle display yards, and wash & detailing bays. The improvements have a lettable area of 363 square metres and a further 6,500 square metres of display yard area, constructed upon a 7,223 square metre site. Valuation Prepared For Limited & Commonwealth Bank of Australia Valuation Purpose Acquisition & First Mortgage Security Purposes Date of Valuation 1 February 2012 Interest Valued 100% Freehold Interest Valuation Approach Capitalisation Approach & Discounted Cash flow Approach Adopted Value $3,500,000 (Three Million Five Hundred Thousand Dollars) plus GST Property Particulars Financial Summary Gross Lettable Area Total GLA 363 sqm Net Passing Income $2,800 ($55/sqm) Showroom 208 sqm Net Market Income $2,800 ($55/sqm) Service Bay Display Yard 155 sqm 5,045 sqm Weighted Average Lease Term (by Income) years Current Vacancy (% Total GLA) 0.00% Weighted Average Lease Term (by Area) years Site Coverage 5.03% Site Area ( 7,223 sqm Cap Approach Assumptions DCF Approach Assumptions Adopted Cap Rate 8.50% Discount Rate 10.00% Discount Rate for PV of Adjustments 8.50% Terminal Yield 8.75% Adopted Cap Rate (Other Income) 8.50% Adopted Lease Term 5.0 years Long Term Vacancy Allowance 0.00% Prime Industrial Growth Rate (Avg. 10yr) 3.17% Allowances for Expiries Occurring within 12 CPI (Avg. 10yr) 2.67% Allowances for Capex Occurring within 12 Value based on DCF Approach $3,676,0 Value based on Capitalisation Approach $3,512,605 Valuation Summary Valuer/s Adopted Value $3,500,000 Name David Ivey AAPI Registration No Rate/sqm of GLA $647/sqm Equivalent Yield 8.53% Name Graham Kennedy FAPI Initial Yield (Passing) 8.57% Registration No. 43 Initial Yield (Fully Leased) 8.57% IRR (10 yr) 10.74% Date 7 February 2012 This is a summary only. It must not be relied on for any purpose. Jones Lang LaSalle s valuation of this asset is subject to assumptions, conditions and limitations. Those are set out in the full valuation report prepared in relation to the asset. Liability limited by a scheme approved under Professional Standards Legislation. 58

58 Executive Summary Financial Details & Critical Analysis Tenancy Overview Tenant 12 Smeaton Way, Rockingham Net Income Area (sqm) % GLA $2,800 5, % Total $2,800 5, % Tenant by Lettable Area 12 Smeaton Way 100% Projected Net Cash Flow $400,000 $350,000 $300,000 $250,000 $200,000 $150,000 $100,000 $50,000 $0 Adopted Growth Rates Industrial 3.20% 3.0% 3.10% 2.0% 3.10% 3.30% 3.00% 2.80% 3.20% 3.20% Capex 2.70% 3.40% 2.60% 2.40% 2.60% 2.80% 2.50% 2.30% 2.70% 2.70% CPI 2.70% 3.40% 2.60% 2.40% 2.60% 2.80% 2.50% 2.30% 2.70% 2.70% This is a summary only. It must not be relied on for any purpose. Jones Lang LaSalle s valuation of this asset is subject to assumptions, conditions and limitations. Those are set out in the full valuation report prepared in relation to the asset. Liability limited by a scheme approved under Professional Standards Legislation. 5

59 Executive Summary Financial Details & Critical Analysis Cash Flow Year Car Yard Letting Up & Incentive Allowances Down Time Probability 75% 75% 75% 75% 75% 75% 75% 75% 75% 75% Incentives 10% 10% 10% 10% 10% 10% 10% 10% 10% 10% Annualised Letting Up & Incentive Allowances Down Time $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Incentives $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Agents Fees $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 T otal $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Annualised Capex Allowances Budgeted Capex $15,000 $15,405 $15,2 $16,343 $55,784 $17,170 $17,651 $18,02 $18,508 $63,361 Capex on Expiry $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Sinking Fund $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 T otal $15,000 $15,405 $15,2 $16,343 $55,784 $17,170 $17,651 $18,02 $18,508 $63,361 Valuer Jones Lang LaSalle David Ivey AAPI Graham Kenney FAPI Certified Practising Valuer (Reg. No. 4433) Certified Practising Valuer (Reg. No. 43) Associate Director, Valuations and Advisory, WA Director, Valuations and Advisory, WA This is a summary only. It must not be relied on for any purpose. Jones Lang LaSalle s valuation of this asset is subject to assumptions, conditions and limitations. Those are set out in the full valuation report prepared in relation to the asset. Liability limited by a scheme approved under Professional Standards Legislation. 60

60 Executive Summary Rockingham Hyundai and Suzuki 1 Carlston Road, Rockingham The subject property comprises of a motor vehicle dealership improved with offices, showrooms, vehicle display yards, parts storage area, workshop and wash & detailing bays. The improvements have a lettable area of 3,433 square metres and a further 1,565 square metres of display yard area, constructed upon a 1 hectare site. Valuation Prepared For Limited & Commonwealth Bank of Australia Valuation Purpose Acquisition & First Mortgage Security Purposes Date of Valuation 1 February 2012 Interest Valued 100% Freehold Interest Valuation Approach Capitalisation Approach & Discounted Cash flow Approach Adopted Value $8,500,000 (Eight Million Five Hundred Thousand Dollars) plus GST (if any) Property Particulars Financial Summary Gross Lettable Area Total GLA 3,433 sqm Net Passing Income $722,500 ($145/sqm) Warehouse 1,85 sqm Net Market Income $644,50 ($12/sqm) Office Display Yard 1,173 sqm 1,565 sqm Other 365 sqm Weighted Average Lease Term (by Income) years Current Vacancy (% Total GLA) 0.00% Weighted Average Lease Term (by Area) years Site Coverage (incl. awning) 34.33% Site Area 10,000 sqm Cap Approach Assumptions DCF Approach Assumptions Adopted Cap Rate 8.50% Discount Rate 10.00% Discount Rate for PV of Adjustments 8.50% Terminal Yield 8.75% Adopted Cap Rate (Other Income) 8.50% Adopted Lease Term 5.0 years Long Term Vacancy Allowance 0.00% Prime Industrial Growth Rate (Avg. 10yr) 3.17% Allowances for Expiries Occurring within 12 CPI (Avg. 10yr) 2.67% Allowances for Capex Occurring within 12 Value based on DCF Approach $8,748,78 Value based on Capitalisation Approach $8,245,358 Valuation Summary Valuer/s Adopted Value $8,500,000 Name David Ivey AAPI Registration No Rate/sqm of GLA $1,701/sqm Equivalent Yield 8.22% Name Graham Kennedy FAPI Initial Yield (Passing) 8.50% Registration No. 43 Initial Yield (Fully Leased) 8.50% IRR (10 yr) 10.44% Date 7 February 2012 This is a summary only. It must not be relied on for any purpose. Jones Lang LaSalle s valuation of this asset is subject to assumptions, conditions and limitations. Those are set out in the full valuation report prepared in relation to the asset. Liability limited by a scheme approved under Professional Standards Legislation. 61

61 Executive Summary Financial Details & Critical Analysis Tenancy Overview Tenant Rockingham Hyundai and Suzuki Net Income Area (sqm) % GLA $722,500 4,8 100% Tenant by Lettable Area Total $722,500 4,8 100% Hyundai & Suzuki 100% Projected Net Cash Flow $1,000,000 $00,000 $800,000 $700,000 $600,000 $500,000 $400,000 $300,000 $200,000 $100,000 $0 Adopted Growth Rates Industrial 3.20% 3.0% 3.10% 2.0% 3.10% 3.30% 3.00% 2.80% 3.20% 3.20% Secondary Office 2.70% 3.40% 2.60% 2.40% 2.60% 2.80% 2.50% 2.30% 2.70% 2.70% Prime Retail 2.70% 3.40% 2.60% 2.40% 2.60% 2.80% 2.50% 2.30% 2.70% 2.70% CPI 2.70% 3.40% 2.60% 2.40% 2.60% 2.80% 2.50% 2.30% 2.70% 2.70% This is a summary only. It must not be relied on for any purpose. Jones Lang LaSalle s valuation of this asset is subject to assumptions, conditions and limitations. Those are set out in the full valuation report prepared in relation to the asset. Liability limited by a scheme approved under Professional Standards Legislation. 62

62 Executive Summary Financial Details & Critical Analysis Cash Flow Year Car Yard Letting Up & Incentive Allowances Down Time Probability 75% 75% 75% 75% 75% 75% 75% 75% 75% 75% Incentives 10% 10% 10% 10% 10% 10% 10% 10% 10% 10% Annualised Letting Up & Incentive Allowances Down Time $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Incentives $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Agents Fees $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 T otal $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Annualised Capex Allowances Budgeted Capex $15,000 $15,405 $15,2 $16,343 $66,41 $17,170 $17,651 $18,02 $18,508 $76,033 Capex on Expiry $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Sinking Fund $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 T otal $15,000 $15,405 $15,2 $16,343 $66,41 $17,170 $17,651 $18,02 $18,508 $76,033 Valuer Jones Lang LaSalle David Ivey AAPI Graham Kenney FAPI Certified Practising Valuer (Reg No. 4434) Certified Practising Valuer (Reg. No. 43) Associate Director, Valuations and Advisory, WA Director, Valuations and Advisory, WA This is a summary only. It must not be relied on for any purpose. Jones Lang LaSalle s valuation of this asset is subject to assumptions, conditions and limitations. Those are set out in the full valuation report prepared in relation to the asset. Liability limited by a scheme approved under Professional Standards Legislation. 63

63 Executive Summary Ford Dealership Great Eastern Highway, Midland, WA The subject property comprises of a motor vehicle dealership improved with offices, showrooms, vehicle display yards, parts storage area, workshop and wash & detailing bays. The improvements have a lettable area of 1,712.square metres and a further 2,080 square metres of display yard area, constructed upon a 5,628 square metre site. Valuation Prepared For Limited & Commonwealth Bank of Australia Valuation Purpose Acquisition & First Mortgage Security Purposes Date of Valuation 1 February 2012 Interest Valued 100% Freehold Interest Valuation Approach Capitalisation Approach and Discounted Cash flow Approach Adopted Value $4,380,000 (Four Million Three Hundred & Eighty Thousand Dollars) plus GST Property Particulars Financial Summary Gross Lettable Area Total GLA 1,712 sqm Net Passing Income $368,300 ($7/sqm) Showroom 450 sqm Net Market Income $368,300 ($7/sqm) Service area Workshop Display Yard 242 sqm 40 sqm 2,080 sqm Weighted Average Lease Term (by Income) years Current Vacancy (% Total GLA) 0.00% Weighted Average Lease Term (by Area) years Site Coverage 30.42% Site Area 5,628 sqm Cap Approach Assumptions DCF Approach Assumptions Adopted Cap Rate 8.50% Discount Rate 10.00% Discount Rate for PV of Adjustments 8.50% Terminal Yield 8.75% Adopted Cap Rate (Other Income) 8.50% Adopted Lease Term 5.0 years Long Term Vacancy Allowance 0.00% Prime Industrial Growth Rate (Avg. 10yr) 3.17% Allowances for Expiries Occurring within 12 CPI (Avg. 10yr) 2.67% Allowances for Capex Occurring within 12 Value based on DCF Approach $4,517,4 Value based on Capitalisation Approach $4,318,488 Valuation Summary Value Adopted Value $4,380,000 Name David Ivey AAPI Registration No Rate/sqm of GLA $1,155/sqm Equivalent Yield 8.38% Name Graham Kennedy FAPI Initial Yield (Passing) 8.41% Registration No. 43 Initial Yield (Fully Leased) 8.41% IRR (10 yr) 10.46% Date 7 February 2012 This is a summary only. It must not be relied on for any purpose. Jones Lang LaSalle s valuation of this asset is subject to assumptions, conditions and limitations. Those are set out in the full valuation report prepared in relation to the asset. Liability limited by a scheme approved under Professional Standards Legislation. 64

64 Executive Summary Financial Details & Critical Analysis Tenancy Overview Tenant Great Eastern Hwy, Midland Net Income Area (sqm) % GLA $368,300 3,72 100% Total $368,300 3,72 100% Tenant by Lettable Area Ford 100% Projected Net Cash Flow $500,000 $450,000 $400,000 $350,000 $300,000 $250,000 $200,000 $150,000 $100,000 $50,000 $0 Adopted Growth Rates Industrial 3.20% 3.0% 3.10% 2.0% 3.10% 3.30% 3.00% 2.80% 3.20% 3.20% Capex 2.70% 3.40% 2.60% 2.40% 2.60% 2.80% 2.50% 2.30% 2.70% 2.70% CPI 2.70% 3.40% 2.60% 2.40% 2.60% 2.80% 2.50% 2.30% 2.70% 2.70% This is a summary only. It must not be relied on for any purpose. Jones Lang LaSalle s valuation of this asset is subject to assumptions, conditions and limitations. Those are set out in the full valuation report prepared in relation to the asset. Liability limited by a scheme approved under Professional Standards Legislation. 65

65 Executive Summary Financial Details & Critical Analysis Cash Flow Year Car Yard Letting Up & Incentive Allowances Down Time Probability 75% 75% 75% 75% 75% 75% 75% 75% 75% 75% Incentives 10% 10% 10% 10% 10% 10% 10% 10% 10% 10% Annualised Letting Up & Incentive Allowances Down Time $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Incentives $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Agents Fees $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 T otal $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Annualised Capex Allowances Budgeted Capex $15,000 $15,405 $15,2 $16,343 $83,676 $17,170 $17,651 $18,02 $18,508 $5,041 Capex on Expiry $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Sinking Fund $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 T otal $15,000 $15,405 $15,2 $16,343 $83,676 $17,170 $17,651 $18,02 $18,508 $5,041 Valuer Jones Lang LaSalle David Ivey AAPI Graham Kenney FAPI Certified Practising Valuer (Reg. No. 4433) Certified Practising Valuer (Reg. No. 43) Associate Director, Valuations and Advisory, WA Director, Valuations and Advisory, WA 66

66 Executive Summary Castle Hill Industrial & Automotive Dealership Centre The subject property comprises a large irregular shaped allotment having extensive frontage to Windsor Road occupying the corner of Victoria Avenue on the southern entry to the Castle Hill industrial area and trading zone. It is developed with seven blocks of older style to more modern small to medium size factory units with eighty-three units in total. The units are subject to a proposed Head Lease to Automotive Holdings Group for a 15 year term. It is proposed to carry out a staged development on the site, involving demolition of various units within the subject complex and construction thereon of four automotive dealership buildings. Automotive Holdings Group has entered into a pre-lease agreement for occupation of the dealership buildings for a 15 year term upon completion. Valuation Prepared For Limited Valuation Purpose Acquisition purposes Date of Valuation 31 December 2011 Interest Valued 100% Freehold Interest Valuation Approach As Is and As If Complete Capitalisation method and the Discounted Cash Flow approach with check comparison calculations. Adopted Value As Is - Stage 1 Adopted Value As If Complete - Stage 2 Adopted Value As If Complete - Stage 3 Adopted Value As If Complete - Stage 4 $26,000,000 (Twenty Six Million Dollars) $32,000,000 (Thirty Two Million Dollars) $3,300,000 (Thirty Nine Million Three Hundred Thousand Dollars) $45,000,000 (Forty Five Million Dollars) The above figures exclude GST payable (if any) Property Particulars As Is Stage 1 Financial Summary As Is Stage 1 Gross Lettable Area Total GLA 11,85 sqm Net Passing Income $2,210,010 ($186/sqm) Current Vacancy (% Total GLA) 0.0% Net Market Income $2,210,010 ($186/sqm) Site Coverage 27% Adopted Outgoings $26,040 ($25/sqm) Site Area 43,310 sqm Weighted Average Lease Term (by Income) 15.0 years Weighted Average Lease Term (by Area) 15.0 years Cap Approach Assumptions As Is Stage 1 DCF Approach Assumptions As Is Stage 1 Adopted Cap Rate Stage % Discount Rate 10.00% Discount Rate for PV of Adjustments 8.50% Terminal Yield.75% Adopted Cap Rate (Other Income) 8.50% Adopted Lease Term (on expiries) 4.0 years Long Term Vacancy Allowance 0.00% Prime Industrial Growth Rate (Avg. 10yr) 3.00% Allowances for Capex Occurring within 12 CPI (Avg. 10yr) 2.70% Value based on Capitalisation Approach $25,60,123 Value based on DCF Approach $26,083,244 Property Particulars As Is Stage 1 Financial Summary As Is Stage 1 Gross Lettable Area Total GLA 11,85 sqm Net Passing Income $2,210,010 ($186/sqm) Current Vacancy (% Total GLA) 0.0% Net Market Income $2,210,010 ($186/sqm) Site Coverage 27% Adopted Outgoings $26,040 ($25/sqm) Site Area 43,310 sqm Weighted Average Lease Term (by Income) 15.0 years Weighted Average Lease Term (by Area) 15.0 years 67

67 Property Particulars As If Complete Financial Summary As If Complete Gross Lettable Area Stage 2 GLA 12,88 sqm Net Passing Income Stage 2 $2,750,000 Gross Lettable Area Stage 3 GLA 14,78 sqm Net Passing Income Stage 3 $3,407,000 Gross Lettable Area Stage 4 GLA 14,48 sqm Net Passing Income Stage 4 $3,20,000 Site Area 43,310 sqm Weighted Average Lease Term 15.0 years Cap Approach Assumptions As If Complete DCF Approach Assumptions As If Complete Adopted Cap Rate Stage % Discount Rate Stage 2.75% Adopted Cap Rate Stage % Discount Rate Stage 3.75% Adopted Cap Rate Stage % Discount Rate Stage 4.75% Discount Rate for PV of Adjustments 8.50% Terminal Yield Stage % Long Term Vacancy Allowance 0.00% Terminal Yield Stage % Allowances for Capex Occurring within 12 Terminal Yield Stage % Capitalisation Approach Value Stage 2 $32,007,86 Prime Industrial Growth Rate (Avg. 10yr) 3.00% Capitalisation Approach Value Stage 3 $3,741,262 Automotive Growth Rate (Avg. 10yr) 2.50% Capitalisation Approach Value Stage 4 $45,432,02 Value based on DCF Approach Stage 2 $32,14,073 Value based on DCF Approach Stage 3 $3,147,443 Value based on DCF Approach Stage 4 $44,645,315 Valuation Summary As Is Stage 1 Valuation Summary As If Complete Stage 2 Adopted Value $26,000,000 Adopted Value $32,000,000 Rate/sqm of GLA $2,12/sqm Rate/sqm of GLA $2,483/sqm Equivalent Yield 8.4% Equivalent Yield 8.50% Initial Yield (Passing) 8.50% Initial Yield (Passing) 8.5% Initial Yield (Fully Leased) 8.50% Initial Yield (Fully Leased) 8.5% IRR (10 yr) 10.04% IRR (10 yr).84% Valuation Summary As If Complete Stage 3 Valuation Summary As If Complete Stage 4 Adopted Value $3,300,000 Adopted Value $45,000,000 Rate/sqm of GLA $2,656/sqm Rate/sqm of GLA $3,106/sqm Equivalent Yield 8.60% Equivalent Yield 8.5% Initial Yield (Passing) 8.53% Initial Yield (Passing) 8.71% Initial Yield (Fully Leased) 8.53% Initial Yield (Fully Leased) 8.71% IRR (10 yr).68% IRR (10 yr).62% Financial Details & Critical Analysis Cash Flow Year Adopted Growth Rates: Stages 1-4 Automotive 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% Industrial 2.50% 2.75% 3.00% 3.25% 3.25% 3.25% 3.00% 3.00% 3.00% 3.00% Prime Retail 2.50% 2.75% 3.00% 3.25% 3.25% 3.25% 3.25% 3.25% 3.25% 3.25% CPI 2.80% 3.50% 2.80% 2.50% 2.50% 2.70% 2.30% 2.40% 2.80% 2.70% Valuation Report: 2A Victoria Avenue, Castle Hill 31 December

68 Annualised Capex Allowances: Stage 1 Budgeted Capex $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Capex on Expiry $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Sinking Fund $41,507 $42,66 $44,162 $45,3 $46,534 $47,67 $48,85 $50,111 $51,314 $52,751 T otal $41,507 $42,66 $44,162 $45,3 $46,534 $47,67 $48,85 $50,111 $51,314 $52,751 Annualised Capex Allowances: Stage 2 Budgeted Capex $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Capex on Expiry $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Sinking Fund $38,666 $3,748 $41,13 $42,21 $43,34 $44,432 $45,632 $46,681 $47,802 $4,140 T otal $38,666 $3,748 $41,13 $42,21 $43,34 $44,432 $45,632 $46,681 $47,802 $4,140 Annualised Capex Allowances: Stage 3 Budgeted Capex $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Capex on Expiry $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Sinking Fund $36,4 $38,030 $3,361 $40,463 $41,474 $42,511 $43,65 $44,663 $45,735 $47,016 T otal $36,4 $38,030 $3,361 $40,463 $41,474 $42,511 $43,65 $44,663 $45,735 $47,016 Annualised Capex Allowances: Stage 4 Budgeted Capex $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Capex on Expiry $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Sinking Fund $28,77 $2,788 $30,831 $31,64 $32,487 $33,2 $34,18 $34,84 $35,824 $36,827 T otal $28,77 $2,788 $30,831 $31,64 $32,487 $33,2 $34,18 $34,84 $35,824 $36,827 Valuer Jones Lang LaSalle Jones Lang LaSalle Leigh Bridges Certified Practising Valuer (Reg No ) Manager, Valuations and Advisory Adam Gander Director, Valuations & Advisory The opinion of value expressed in this report is that of the Valuer who undertook the valuation and who is the primary signatory on the report. That Valuer is Leigh Bridges. Valuation Report: 2A Victoria Avenue, Castle Hill 31 December

69 The API team Peter Hughes, Managing Director: A founding director of API and 35 years experience in the property industry has seen Peter establish a reputation as one of WA s most respected property professionals. Peter has experience as a valuer, consultant and project coordinator for investment acquisitions and commercial and industrial sales and has the principal responsibility for assessing property acquisitions that meet with the investment objectives of API and its clients. Miles Ashton, Business Development: 15 years working in global capital markets including time in London, Hong Kong and Singapore, has given Miles a unique insight into capital raising from his experiences working at a top 10 global investment bank and more recently as managing director of an ASX listed company. Miles is responsible for sourcing investor equity through the marketing of API property syndicates to current and prospective investors. Oliver Mahé, Fund Manager: Oliver has 8 years of experience in the property funds management industry in Australia having previously worked as an investment portfolio manager with Knight Frank prior joining API. Oliver is responsible for overseeing the management of the API property portfolio and takes an active role in investor relations. Sol Majteles, Non Executive Director: Sol was a founding director of API in 2001 and is responsible for ensuring the legal aspects of property acquisitions and syndicate arrangements are properly completed. Sol has over 35 years experience in property law, focusing on all aspects of property acquisition, syndication, development, leasing and sale. He is currently a partner at Lavan Legal, one of Western Australia s largest independently owned law firms. Joe Evangelista, Non Executive Director: A senior partner at BDO Accountants, Joe is a qualified Chartered Accountant and is responsible for the accounting and taxation issues relating to API s property acquisitions. Joe has 18 years experience as a chartered accountant and his experience in the property industry focuses on taxation planning, business administration compliance, investment analysis, and financial planning. Australasian Property Investments Ltd Level 2, 50 Subiaco Square, Subiaco WA 6008 PO Box 472, Subiaco WA 604 P: F: E: info@austpropinvest.com.au ABN: AFSL: