AA Insurance Building Information Memorandum

AA Insurance Building 46 Sale Street | Auckland CBD

Information Memorandum to Mackersy Property Investors 2 December 2020 The investment offer set out in this information memorandum is not intended to and does not constitute an offer to the public of a financial product.

This information memorandum is not a registered prospectus or disclosure document. The investment is only open to Wholesale Investors under the Financial Markets Conduct Act 2013.

An opportunity to purchase a NZGBC 5 star rated office building located at 46 Sale Street in Central Auckland.

6.00% Projected Gross Return Year 1

3

4

The Opportunity Mackersy Property has secured the opportunity to purchase a NZGBC 5 star rated office building located at 46 Sale Street in Central Auckland. This premium grade office building was completed in 2017 with AA Insurance as the anchor tenant occupying three of the seven levels.

The building comprises seven office levels, 100 car parks and is positioned on Sale Street, south of the growing Wynyard Quarter and Viaduct Basin in Auckland CBD. Located just an eight minute walk from the new Aotea train station which is forecast to be New Zealand’s busiest railway station upon opening, this location makes for an easy daily commute for the buildings tenants.

The opportunity meets our investment fundamentals with a modern building, strong tenant covenants, attractive weighted average lease term, prime Auckland central business district location and fixed annual growth.

Exceptional investment grade asset and an opportunity not to be missed.

5

Contents

4

The Opportunity

7

Key Investment Details & Key Portfolio Details

8

Investment Structure

10

The Building

12

Tenancy Schedule

14

The Tenant and The Lease

22 Location 24

Investment Model

26

Risks & Considerations

28

Non-public Offer

29 Disclaimer

6

7

Key Investment Details

Key Property Details

Equity Requirement

Address

$100,000 parcels

46 Sale Street, Auckland CBD

Equity Payment

Vendor

20% deposit 16 December 2020

CC Hera Trust PTE Limited

Balance 10 February 2021 Projected Gross Return 6.00% per annum Tenants AA Insurance Limited Ezibuy Limited

Building NZGBC 5 Star rated Total Lettable Area 11,353m² Annual Net Passing Rent

Fujitsu New Zealand Limited

$7,767,787

TNS New Zealand Limited

LVR

Philip Morris (New Zealand) Limited Suntory Coffee New Zealand Limited T/A Robert Harris

50%

The Embedded Network Company T/A Tenco (Embedded Network)

National Building Standard (NBS)

WALT

100%

7.8 years

Car Parks

Rent Review Mechanism

100

3% annual increases Occupancy 100%

8

Investment Structure Settlement

investment structure used). This will be secured by

has not been accounted for. The first monthly

management cost will be split between the tenants

a first registered mortgage over the Property and

payment to investors will occur two months

and Partnership. The tenants will be charged 37%

General Security Agreement over the Partnerships

following settlement (estimated 20 April 2021) and

of the management cost with the Partnership

assets. The loan will initially be interest only to

will continue to be paid monthly. The investment

responsible for 63% of the cost ($184,616 plus GST

maximise investor returns with an initial loan to

model on page 24 includes the projected income,

per annum). This fee is included in the investment

value ratio of approximately 50%. The loan facilities

expenses and gross return to investors for years

model on page 24.

will be non-recourse so guarantees are not required

1—5. It is likely the Partnership will benefit from

by investors.

tax losses relating to depreciation and other

Insurance

tax deductible expenses but the exact amount

Mackersy Property will put in place a policy which

of those losses is not known at the date of this

Investment Model

includes full replacement and reinstatement

memorandum. It should be noted that the actual

insurance with our preferred brokers, Crombie

been calculated on an annual net income of

All project establishment costs in connection

returns to investors may vary from those shown

Lockwood. The Tenants are responsible for

$7,767,787 plus GST at a capitalisation rate of 5.11%.

with the acquisition such as legal fees, building

in the investment model due to variables such as

premium payments in accordance with the Leases.

The land and buildings located at 46 Sale Street, Auckland (Property) are to be purchased by a Limited Partnership set up by Mackersy Property (Partnership), from CC Hera Trust PTE Limited (Vendor) with settlement scheduled for 17 February 2021.

Purchase Price The total purchase price of the Property is $152,000,000 (pre-acquisition costs) which has

Establishment Costs and

reports, engineer reports, LIM reports, bank and

interest rates, tax, unforeseen capital expenditure

Equity Requirement

valuation fees are set at $6,000,000 plus GST. See

and vacancy.

The Partnership will require $82,000,000 of

the investment model on page 24. These costs

investor equity to assist with the purchase of

are fixed and the Partnership will not incur further

the Property. The initial 20% of investors’ equity

establishment fees.

Management

Structure The Limited Partnership structure is ideally suited to a commercial property investment entity

Mackersy Property cover the investment process

as it provides the protection of limited liability,

from beginning to end, providing in-house property

Projected Gross Return

simple liquidity and tax flexibility. Limited liability

and facilities management freeing qualified

means investors, as Limited Partners, are only

balance of equity is required by 10 February

The Partnership is projected to provide investors

investors from the usual burdens of private

liable to the extent of their equity contributions

2021 to enable settlement of the Property.

a 6.00% gross return in the first year of the

ownership. Mackersy Property currently manage

(funds invested), plus any other obligations

Mackersy Property reserves the right to include

investment following acquisition of the Property.

over 100 commercial properties throughout New

expressed in the Limited Partnership Agreement.

an equity underwrite if required. Any costs

To ensure a 6.00% gross return to investors in Year

Zealand for private investment groups and deal

The Partnership will be established by Mackersy

associated with the underwrite will be covered by

1, Mackersy Property will provide an underwrite

with over 300 tenants. A management agreement

Property prior to investor funds being received with

Mackersy Property and are included in the total

to the Partnership of $233,033, which will be a

will be entered into between the Partnership and

Units in the Partnership to be issued to investors

establishment costs.

one off payment made to the Partnership on

Mackersy Property for an initial term of three

in proportion to the level of funds contributed

settlement. Any tax payable by the Partnership

years. For managing the Property on behalf of

following settlement of the Property. The Property

the Partnership, Mackersy Property will charge

will be managed by the General Partner which will

a management fee equal to 3.65% of the annual

be a limited liability company set up by Mackersy

net rent ($292,616 plus GST per annum). The fee

Property (General Partner). The General Partner

will increase in line with the rental income. The

will be liable for all of the debts and liabilities of

is required by 16 December 2020 to confirm an investors’ involvement in the Partnership. The

Bank Funding To assist with the acquisition, the Partnership will obtain term investment funding of approximately $76,000,000 (this may vary depending on the final

the Partnership and will provide the corporate governance to run the investment professionally and profitably.

9 Funds in Funds out Equity

Limited Partner

Limited Partner

Equity

Investor 1

Investor 2

Contribution

Gross

Limited Partner

Limited Partner

Return

Investor 3

Contribution GENERAL PARTNER

Shareholder

Investor 1

Investor 2

Shareholder

Shareholder

Investor 3

Investor 4

LIMITED PARTNERSHIP

Day to day operator

Owner Borrower

Governance

Unit

The General Partner will be an entity controlled by

The investment is for Units in the Partnership which

the Directors of Mackersy Property until settlement

will own the Property. The Partnership has been

of the Property. Following settlement, a Board of

structured to provide a total of 82,000 Units at

Directors will be appointed from the investment

an issue price of $1,000 per Unit. The minimum

group, which may include an independent director.

investment will be $100,000 representing 100 Units

Any investor wishing to become a director will

but investors may choose as many Units as they

need to provide a written statement to Mackersy

wish above 100, subject to availability. Units in the

Property setting out their skills and how they can

Partnership will be issued to investors following

contribute to the governance of the Partnership.

settlement of the Property. Until such time as the

Directors insurance will be in place from settlement

Units are issued, all Units in the Partnership and

of the Property. The investment model on page 24

investor funds will be held on trust for the benefit

incorporates a directors insurance fee of $2,350

of investors in proportion to the sum invested.

plus GST per annum.

The General Partner must obtain 75% approval from investors before making any major decisions affecting the Partnership including any potential sale of the property, incurring expenditure in excess of 5% of the asset value of the Property, appointing any replacement General Partner or varying the terms of the Limited Partnership Agreement.

Shareholder

Tax The indicated gross return does not account for tax. Investors may choose to invest directly as a Limited Partner, receiving the full gross return from the Partnership and taking care of their own tax liability. Alternatively, investors may invest through a limited liability company (established and managed by Mackersy Property) that itself will be a Limited Partner in the Partnership. Any investor who chooses to invest through the Mackersy Property limited liability company will receive their returns tax paid. It is likely that investors will benefit from

Investor 4

Net

(Limited Liability Company)

Return

Partnership tax losses relating to depreciation and

third parties, subject to those purchaser’s

other tax-deductible expenses that can be passed

complying with the Anti-Money Laundering and

to investors as Limited Partners, but the exact

Countering Financing of Terrorism Act 2009 and

amount of those losses is not known at this time.

the wholesale exclusion criteria of the Financial

Exit Process/Liquidity

Markets Conduct Act 2013. It is Mackersy Property’s objective to create liquidity by providing investors

Investors will have the ability to sell their Units in

with a simple, fast and transparent exit process that

the Partnership at anytime, to any person at the

also has the objective of maximising value to the

maximum value another investor is willing to pay.

investor. This process will also enable new investors

The investor can then decide on the value they

to enter the Partnership at any time in the future.

wish to sell their interest for and Mackersy Property will use its best endeavours to find a purchaser of the Units. Transfers to family or related parties are exempt. Investors will not be subject to preemptive rights to other investors in the Partnership.

If and when an investor wishes to sell they will be required to give written notice to Mackersy Property. The investor will then be provided with information regarding any costs of sale along with the latest market valuation of the Property and a suggested market valuation of their ownership interest at that time. Purchasers will be sought from within the ownership group, from the wider Mackersy Property investor database or interested

10

The Building 46 Sale Street, Auckland CBD Originally developed by Mansons TCLM, 46 Sale Street is a new generation building featuring energy efficient plant and a unique, well insulated façade.

The building achieves a 5 star green rating for both design and build featuring efficient lighting, appliances, water heating and air heating and cooling systems. The design consists of two levels of car parking and seven levels of commercial office space with a small café on the ground floor. The central atrium provides good natural light to the internal zones of the floor plates, while providing architectural interest when viewed from those areas looking into the atrium.

The building is constructed from a concrete framed structure with two levels of underground parking. The foundations of the building have been taken to bed rock by pad foundations and concrete piles. Suspended floors are precast concrete double ‘T’ units with Insitu topping over. The floor units are supported on precast concrete beams and Insitu concrete columns. The roof is light weight steel cladding supported on proprietary cold rolled steel purlins.

11

The Building 46 Sale Street, Auckland CBD Level 6

AA Insurance | 1,683m²

Level 5

AA Insurance | 1,682m²

Level 4

AA Insurance | 1,684m²

Level 3

Ezibuy Limited | 1,684m²

Level 2

Fujitsu New Zealand Limited | 1,682m²

Level 1

TNS New Zealand Limited | 1,680m²

Ground Floor

Philip Morris (New Zealand) Limited | 1,106m²

Office Ground Floor

Robert Harris | 152m²

Café Car Parking

AA Insurance | 50 car parks Fujitsu New Zealand Limited | 20 car parks Ezibuy Limited | 15 car parks TNS New Zealand Limited | 8 car parks Philip Morris (New Zealand) Limited | 7 car parks

12

Tenancy Schedule 46 Sale Street, Auckland CBD Tenant

Remaining

Net Rent

% of Rent

Right of Renewal

Rent Review Mechanism

$3,528,762

45%

Two (2) rights of six (6) years

Fixed annual increases of 3% on each anniversary of the

Gross Lettable Area

Term (Years) AA Insurance Limited

9.3

5,049m²

Commencement Date being 1 February Ezibuy Limited

7.1

$1,141,860

15%

Two (2) rights of five (5) years

Fixed annual increases of 3% on each anniversary of the

1,684m²

Commencement Date being 6 June Market Rent Reviews on renewal – soft ratchet Fujitsu New Zealand Limited

7.4

$1,166,391

15%

One (1) right of six (6) years

Fixed annual increases of 3% on each anniversary of the

1,682m²

commencement date being 1 May Market Rent Reviews on renewal – soft ratchet TNS New Zealand Limited

5.9

$1,135,559

15%

Two (2) rights of three (3) years

Fixed annual increases of 3% on each anniversary of the

1,680m²

Commencement Date being 9 October Market Rent Reviews on renewal – soft ratchet Philip Morris (New Zealand) Limited

6.1

$700,537

9%

One (1) right of (6) years

Fixed annual increases of 3% on 19 December 2019 and

1,106m²

each subsequent anniversary of that date Suntory Coffee New Zealand Limited

3.6

$61,318

1%

Two (2) rights of four (4) years

Fixed annual increases of 2.5% on the Base Rent on each

152m²

anniversary of the Commencement Date being 22 June

T/A Robert Harris

Market Rent Reviews on renewal – soft ratchet The Embedded Network Company

$33,361

Five (5) rights of 12 months

T/A Tenco (Embedded Network)* Total Income

*An embedded network income of $33,361 per annum

$7,767,787

100%

11,353m²

13

+ F 45

15+1591F The Tenants 1%

9%

15%

15%

15%

AA Insurance Limited Ezibuy Limited

Fujitsu New Zealand Limited TNS New Zealand Limited Philip Morris

Robert Harris

45%

14

AA Insurance Limited The anchor tenant for this site, AA Insurance Limited was established in 1994 as a joint venture between the New Zealand Automobile Association (NZAA) and Vero Insurance, which is the New Zealand arm of the Australian Suncorp Group.

Suncorp was established in 1919 in Queensland as the “State Accident Insurance Office”. By the mid-1990s “Suncorp” offered combined financial, banking and insurance operations with nearly $10 billion in assets. By 2007, Suncorp holds AUD$95 billion with over 9 million customers.

NZAA was established in 1903 in Auckland, by 1991 NZAA was the largest club in New Zealand. Now NZAA boasts more than 1.7 million members and offering road and battery, driver education and training and other on-road and off-road services.

Recognised as New Zealand’s most trusted general insurer from 2011 onward by Readers Digest, and recognised as New Zealand Direct general insurance company of the year six times since 2012, AA Insurance also boasts an A+ (Strong) Insurer Financial Strength Rating given by Standards & Poor’s.

AA Insurance occupy three levels of this building, being their New Zealand head office and call centre.

Lettable Area

5,049m²

+1591 15 Car Parks

50

Income Split by Tenant

45 45%

Terms

Lease Details

Tenant

AA Insurance Limited

Remaining Term

9.3 years

Commencement Date

1 February 2018

Remaining Rights of Renewal

AA Insurance Limited

Net Annual Rent

$3,528,762 plus GST and Outgoings

Outgoings

45% (Being the proportion that the rentable area of the Premises bears to the rentable area of the Building)

Ezibuy Limited Fujitsu New Zealand Limited

Rent Review

Robert Harris

Fixed annual increases of 3% on each anniversary of the Commencement Date being 1 February

TNS New Zealand Limited Philip Morris (New Zealand) Limited

Two (2) rights of six (6) years

Use of Premises

Commercial Offices

Insurance

Full replacement and reinstatement with 24 months business interruption cover

15

16

Ezibuy Limited Established in 1978 by two brothers in Palmerston North, EziBuy has grown into the largest fashion and homeware multi-channel retailer in Australasia. In 2013 EziBuy was purchased by Woolworths Limited and was on-sold to Alceon Group in 2017. Mosaic Brands (formerly Noni B) has since purchased a 50.1% shareholding in EziBuy, with the option to purchase the rest of the company if they choose. Mosaic owns several other fashion retailers such as Rockmans, Beme, Millers and Crossroads boasting 1,300 stores in Australia alone.

In 2019, EziBuy reported $144 million in revenue, a majority of which was done through online marketplaces, a trend which has continued in 2020. Being Ezibuy’s New Zealand head office, they product test sample garments. Sample sales are hosted from this facility as part of their product testing line.

Lettable Area

1,684m²

Car Parks

15

Lease Details

Tenant

Ezibuy Limited

Remaining Term

7.1 years

Commencement Date

6 June 2018

Remaining Rights of Renewal

15 15 45 1 9 + 15 Income Split by Tenant

15%

Terms

Two (2) rights of five (5) years

Net Annual Rent

$1,141,860 plus GST and Outgoings

Outgoings

14.95% (being the proportion that the rentable area of the Premises bears to the rentable area of the Building)

AA Insurance Limited Ezibuy Limited

Rent Review

Date being 6 June Market Rent Reviews on renewal – soft ratchet

Fujitsu New Zealand Limited TNS New Zealand Limited Philip Morris (New Zealand) Limited Robert Harris

Fixed annual increases of 3% on each anniversary of the Commencement

Use of Premises

Commercial Offices

Insurance

Full replacement and reinstatement with 24 months business interruption cover

17

Fujitsu New Zealand Limited Owned and operated ultimately by Fujitsu Limited, a Japanese telecommunications manufacturer established in 1935, Fujitsu is a household name in heat pumps and airconditioning technology in New Zealand.

Fujitsu is not just involved in heat pumps, they are a world-leading computer manufacturer, involved in creating the world’s most powerful supercomputer in June 2020 and leading developers of artificial intelligence. Fujitsu also works heavily in the IT services, working with Seven-eleven and McDonalds to provide point of sale and delivery systems to help streamline operations.

In the 2019-2020 financial year, Fujitsu Oceania reported $1.1 billion in revenue. This building is Fujitsu’s Auckland branch.

Lettable Area Car Parks

1,682m² 20

Terms

Lease Details

Tenant

Fujitsu New Zealand Limited

Remaining Term

7.4 Years

Commencement Date

1 May 2018

Remaining Rights of Renewal

15 45 1 + 9 15

Income Split by Tenant

15 15%

One (1) right of six (6) years

Net Annual Rent

$1,166,391 plus GST and Outgoings

Outgoings

14.93% (being the proportion that the rentable area of the Premises bears to the rentable area of the Building)

AA Insurance Limited

Rent Review

Fixed annual increases of 3% on each anniversary of the Commencement Date being 1 May

Ezibuy Limited

Market Rent Reviews on renewal – soft ratchet

Fujitsu New Zealand Limited TNS New Zealand Limited Philip Morris (New Zealand) Limited Robert Harris

Use of Premises

Commercial Offices

Insurance

Full replacement and reinstatement with 24 months business interruption cover

18

TNS New Zealand Limited TNS New Zealand Limited is a full service market research based consultancy offering insight and in-depth understanding for businesses seeking growth strategies in New Zealand and the wider Asia Pacific region. Also known as Colmar Brunton and Kantar, two of New Zealand’s leading market research agencies. TNS New Zealand Limited was founded in 1994 and purchased in 2019 by Bain Capital, an American Private Investment firm with more than $105 billion in investments as of 2018, Kantar was valued at $4.0 billion at the time.

Kantar encompass artificial intelligence and machine learning making existing offerings faster and cheaper. They are involved with a number of national polling and information gathering activities, recently used by New Zealand Herald in their election coverage.

This building houses TNS’s New Zealand head office and Auckland branch.

Lettable Area

1,680m²

Car Parks

8

Income Split by Tenant

Terms

Lease Details

Tenant

TNS New Zealand Limited

Remaining Term

5.9 years

Commencement Date

9 October 2017

Remaining Rights

915 +14515

of Renewal Net Annual Rent

$1,135,559 plus GST and Outgoings

Outgoings

14.91% (being the proportion that the rentable area of the Premises bears to the rentable area of the Building)

AA Insurance Limited

15%

Ezibuy Limited

Two (2) rights of three (3) years

Rent Review

Fixed annual increases of 3% on each anniversary of the Commencement Date being 9 October

Fujitsu New Zealand Limited

Market Rent Reviews on renewal – soft ratchet

TNS New Zealand Limited Philip Morris (New Zealand) Limited

Robert Harris

Use of Premises

Commercial offices and ancillary uses

Insurance

Full replacement and reinstatement with 24 months business interruption cover

19

Philip Morris (New Zealand) Limited Owned by Philip Morris (Australia) and ultimately owned by Philip Morris International (PMI). PMI ranked as the 108th largest company ranked by total revenue in 2018 according to Fortune 500.

Despite starting life in the mid-1800s as a tobacco sales company, Philip Morris has committed to investing in smoke-free alternatives for tobacco consumers, such as heatnot-burn products and e-cigarettes.

In East Asia and Australia/New Zealand, revenue for Philip Morris is up 8.5% year on year for the quarter ending 30 September 2020.

This building houses Phillip Morris’s head office and Auckland branch.

Lettable Area Car Parks

45 15 + 1

1,106m² 7

Income Split by Tenant

Lease Details

Tenant

Phillip Morris (New Zealand) Limited

Remaining Term

6.1 years

Commencement Date

4 November 2019

Remaining Rights of Renewal

9%

9

Terms

Net Annual Rent

$700,537 plus GST and Outgoings

Outgoings

9.14% (being the proportion that the rentable area of the Premises (excluding car parking spaces) bears to the rentable area of the Building)

AA Insurance Limited Ezibuy Limited

Rent Review

Philip Morris (New Zealand) Limited Robert Harris

Fixed annual increases of 3% on 19 December 2019 and each subsequent anniversary of that date

Fujitsu New Zealand Limited TNS New Zealand Limited

One (1) right of (6) years

Use of Premises

Commercial offices and ancillary uses

Insurance

Full replacement and reinstatement with 36 months business interruption cover

20

Suntory Coffee New Zealand Limited T/A Robert Harris

Trading in New Zealand as Robert Harris, this is a household name in coffee shops. With 37 locations nationwide, Robert Harris was acquired by Suntory Coffee Australia in 1990. Owned by Cerebos Pacific and ultimately Suntory, the worlds third-largest spirits producer and owner of Frucor, Cerebos owns other staple New Zealand brands Greggs and Atomic.

Income Split by Tenant

9 + 15 1 45

Terms

Lease Details

Tenant

Suntory Coffee New Zealand Limited

Remaining Term

3.6 years

Commencement Date

22 June 2020

Remaining Rights

1%

of Renewal Net Annual Rent

Base Rent - $61,318 plus GST and Outgoings

Turnover Rent

8% of Gross Revenue per annum where the Gross Revenue exceeds the annual threshold of $766,470 (GST exclusive)

AA Insurance Limited Ezibuy Limited

Outgoings

1.25% (being the proportion that the rentable area of the Premises bears to the rentable area of the Building)

Fujitsu New Zealand Limited TNS New Zealand Limited

Two (2) rights of four (4) years

Rent Review

Fixed annual increases of 2.5% on the Base Rent on each anniversary of the Commencement Date being 22 June

Philip Morris (New Zealand) Limited

Market Rent Reviews on renewal – soft ratchet

Robert Harris Use of Premises

Retail Cafe

Insurance

Full replacement and reinstatement with 36 months business interruption cover

21

The Embedded Network Company Limited T/A Tenco (Embedded Network) A New Zealand owned and operated company, The Embedded Network Company, or Tenco, is a private utility network service provider that has been operating in New Zealand for 10 years.

With over 100 properties nationwide in their portfolio, Tenco provides embedded network management, reconciliation and billing of networks, and network monitoring, analytics and advisory services.

Embedded network management aims to take the mains connections for power, gas and water to a new development or large commercial building and to streamline the utility payments, taking care of the connection and brokerage to provide reductions in energy costs and in-depth management and analytics to landlords and tenants.

Licence For Use Of Lines Terms

Lease Details

Tenant

The embedded Network Company Limited

Remaining Term

1 year

Commencement Date

18 December 2017

Remaining Rights of Renewal Net Annual Rent

Five (5) rights of 12 months

33% of the projected network profit. Currently $33,361 per annum

22

46 SALE STREET

23

The Location

46 Sale Street is located in the heart of Auckland CBD, 300m from Victoria Park and 800m from Queen Street. The Property is well positioned with easy access to both the Southern and Northern motorway systems and inter-city railway. With the new underground railway due for completion in 2024, this site will only become more desirable. With prime access to the new Aotea Station only 600m away on the corner of Albert and Wellesley Streets, this property provides a strong inner city location.

Auckland City is the largest metropolitan area in New Zealand, home to over 1.6 million people, more than 30% of New Zealand’s total population. The largest regional economy in New Zealand, Auckland contributes 37.6% of New Zealand’s national GDP. Auckland is a key hub for business, commercial and scientific development. With an active harbour and easy access to the other key New Zealand harbour in Tauranga, Auckland forms the cornerstone of New Zealand economic ‘golden triangle’. Widely known as the business heart of New Zealand, Auckland has had growth across all economic sectors since 2010.

24

Investment Model Rental Income CAP Rate

Purchase Price Acquisition Costs

$7,767,787 5.11%

$152,000,000 $6,000,000

Total Cost

$158,000,000

Bank (37%)

$76,000,000

Equity

$82,000,000

Projected Cash Flow Year 1

Year 3

Year 5

Rental Income

$7,767,787

$8,240,845

$8,742,713

Underwrite

$233,033

-

-

Total Income

$8,000,820

$8,240,845

$8,742,713

Interest Rate Cost

$2,774,000

$2,774,000

$2,774,000

$184,616

$189,417

$199,454

$17,500

$18,029

$18,574

Accounting Audit

$25,000

$25,756

$26,534

Maintenance

$80,008

$82,408

$87,427

$2,350

$2,421

$2,494

Total Costs

$3,083,474

$3,092,031

$3,108,483

Surplus

$4,917,346

$5,148,814

$5,634,230

6.00%

6.28%

6.87%

Management Accounting

Directors Insurance

Return to Investors

25

Assumptions CPI

Property Management

Rate of 1.50% per annum

3.65% of net rent per annum split

Net Income Based on initial net rent of $7,767,787 per

between the Tenants (37%) and the Partnership (63%).

annum in accordance with the signed

Accounting

Lease. Annual 3% increases have been

$17,500 per annum, increasing in line

factored into the investment model per

with CPI inflation.

the leases from year 2.

Mackersy Property Underwrite A $233,033 one off payment will be made to the Partnership upon settlement of the property.

Interest Rate Cost Average cost of funds estimated to be 3.65% for years 1 to 3 based on a mixture

Maintenance $80,008 per annum or 1.00% of net rent.

The maintenance fund will increase with any increase in rent.

Directors Insurance $2,350 per annum, increasing in line with CPI inflation.

of fixed and variable rates. Interest

Capital Growth

rates yet to be confirmed and subject

No capital growth assumed.

to change. Interest rate on year 4 and 5 based on no interest rate change.

No Guarantee No guarantee can be given in respect of

Loan-to-value ratio

the projected annual return, strength of

Based on 50% lending of the contracted

the tenants or the lending rates applied.

purchase price of $152,000,000.

26

Risks & Considerations

There are several risks and considerations associated with all commercial property investments which are set out below. Mackersy Property always considers risks and has a number of acquisition and investment strategies to mitigate and reduce potential risks. These are listed in the right hand column below as “Mitigation Strategies� .

27

Tenant

Risk

Mitigation Strategies

The Tenants are unable to pay rent or on expiry (or termination) of the lease the property

Based on Mackersy Property’s tenant analysis, we are confident the likelihood of a any

may not be immediately re-let or re-let on less favourable terms.

tenant default is minimal. The tenants are all very strong businesses with a proven track record of strong financial performance.

Repairs

Unforeseen major structural repair or capital expenditure may be incurred (excluding

Full replacement and reinstatement insurance is put in place to cover any damage

any structural repairs).

caused by insured risks and the tenants are responsible for all premiums and excesses in accordance with the leases. The tenants are responsible for all repairs and maintenance. A maintenance budget has been factored into the model of $80,008 per annum plus GST on page 24.

Funding

Interest rates and the bank covenants are subject to change.

Advice is provided to the directors with an interest rate hedging strategy to mitigate this risk.

Increase in interest rates may impact the return to investors.

The investment model allows for a mixture of fixed and floating interest rates for the first three years which will be locked in from settlement.

Liquidity

If the Partnership is not meeting its bank covenants it may need to raise additional

To the extent that any investor provides further capital, this investment would ordinarily

capital to meet the banks’ amended covenants.

attract a return on the additional funds invested.

Investors’ equity may be locked in for an indefinite period of time if they are unable to

Mackersy Property manage the Unit sale process endeavouring to offer the best

sell their Units or until the Properties are sold and the Partnership is wound up.

opportunity for finding a willing purchaser; initially Units are offered to all current Unit holders under the Partnership Agreement and to Mackersy Property’s private investment group.

At the time of selling Units, the Unit price in the Partnership may be more or less than

Any issue of further Units cannot occur without first offering the Units to existing Unit

the original price paid. Investors’ percentage interest in the Partnership may be diluted if

holders. Further capital invested would ordinarily attract a return on the additional funds

the Partnership issues further Units to raise capital.

invested.

No Guarantee No guarantees are given by Mackersy Property or any other person in respect of the Property, the tenants or the return which investors may receive in relation to this investment.

28

Non-Public Offer

The investment oer set out in this information memorandum is not intended to and does not constitute an oer to the public of a financial product. The investment is only open to the Mackersy Property pre-qualified investment group.

To be eligible to invest you must be exempt under the provisions of the Financial Markets Conduct Act 2013. This information memorandum is not a registered prospectus or disclosure document and does not comply with the disclosure requirements of the Financial Markets Conduct Act 2013.

This document does not contain the information that those documents would contain. This information memorandum has been prepared for general information purposes only and investors should carry out their own independent review, investigations, analysis and assessment of the information in this document.

29

Disclaimer

At the time this Information Memorandum is presented Mackersy Property has completed its due diligence investigations and the information included in this document is based, to the best of our knowledge, on the information available to us at this time. Mackersy Property reserves the right to change any aspect of the proposed investment should that be in the best interests of the parties.

Where Mackersy Property finds any information included in this document to be incorrect or any aspect needs changed prior to confirming the Agreement as unconditional, Mackersy Property will advise you of this and give you an opportunity to accept the updated situation before committing any funds to this investment on your behalf.

No guarantee is provided by Mackersy Property regarding the number of Units that you will be allocated or the quantum of investment you can make in this opportunity or the actual returns that will be distributed to investors. The projections and indications given are made based on the information that is held at this time.

To register your interest in this investment, please email: invest@mackersyproperty.co.nz

To discuss this investment further, please contact: Mick Pannett

Marianne Coen

mpannett@mackersyproperty.co.nz

mcoen@mackersyproperty.co.nz

(+64) 22 477 8267

(+64) 3 450 9539

Omea Willows

Hamish Wilton

owillows@mackersyproperty.co.nz

hwilton@mackersyproperty.co.nz

(+64) 21 331 742

(+64) 27 594 8527

Adam Copland

Kate Mackersy

acopland@mackersyproperty.co.nz

kmackersy@mackersyproperty.co.nz

(+64) 27 944 0510

(+64) 27 535 3023

mackersyproperty.co.nz