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”

A tenant or number of tenants are unable to pay rent or on expiry (or termination) of the leases the property may not be immediately re-let or re-let on less favourable terms. Based on Mackersy Property’s tenant analysis, we are confident the likelihood of a tenant default is minimal. The Properties are well located for selling.

Development Unforeseen major structural repair or capital expenditure may be incurred (excluding any structural repairs).

A decision may be made to further develop the undeveloped property leading to additional costs being expended. Full replacement and reinstatement insurance is put in place to cover any damage caused by insured risks and the majority of tenants are responsible for premiums and excesses in accordance with the leases. The tenants are responsible for the majority of repairs and maintenance. A maintenance budget has been factored into the financial scenarios.

Full development feasibilities will be completed prior to any development occurring and development will only be undertaken where development risks are managed to the fullest extent possible.

Construction In conjunction with any development that may occur further construction will also be required and the inherent risk with construction are price and timing uncertainties. All construction risk will be managed through appropriate contractual documentation and all construction will be completed in such a way as to ensure that cost and time over runs are managed as best as possible.

The governance team along with the Mackersy Property have ample experience in running fully risk mitigated development and construction projects. Construction insurance also in place during any build.

Funding Interest rates and the bank covenants are subject to change.

Increase in interest rates may impact the return to investors.

If 5MQ LP is not meeting its bank covenants it may need to raise additional capital to meet the banks’ amended covenants. Advice is provided to the directors with an interest rate hedging strategy to mitigate this risk.

The investment model allows for a mixture of fixed and floating interest rates and an appropriate hedging strategy will be adopted by the Directors.

To the extent that any investor provides further capital, this investment would ordinarily attract a return on the additional funds invested.

Liquidity Investors’ equity may be locked in for an indefinite period of time if they are unable to sell their units or until the Properties are sold and M5M LP is wound up. Mackersy Property manage the unit sale process endeavouring to offer the best opportunity for finding a willing purchaser; initially units are offered to all current unit holders under the M5M LP limited partnership agreement and to Mackersy Property’s private investment group.

At the time of selling units, the unit price M5M LP may be more or less than the original price paid. Investors’ percentage interest in M5M LP may be diluted if M5M LP issues further units to raise capital. Any issue of further units cannot occur without first offering the units to existing unit holders. Further capital invested would ordinarily attract a return on the additional funds invested.