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BOWEN basin development and opportunity fund No.1 (bbDof1) investor update, November 2012


BBDOF1 investor update Development Approval has been achieved for both “Riviera Mackay” and “Driftwood Blacks Beach”. These two results are an extremely positive outcome, and demonstrate the management team’s ability to deliver the Fund’s commercial objectives and goals. The Fund is currently forecast to be able to exceed commercial objectives as outlined at the Fund launch. - Ben Anderson, Investment Manager

FUND AT A GLANCE

FUND PROGRESS

T

he Fund optioned the land for Riviera Mackay for a 12 month period under a structured

transaction for a total price of $2.26m. Since optioning the land, the Fund successfully redesigned the development to:

• Comprise a 10-level residential development comprising 64 units, 48 x 2 bed and 16 x 1 bed (versus 43 units over 8 levels). • Reduce apartment sizes and re-design to better suit market conditions. • Remove the underground parking. • These activities significantly enhanced the value of the land .

Fund Size

$1.3m

Term to Date

10 months

Fund Term

up to 2 years

Target Return

15%, net of fees and other expenses

Fund Objective

Invest in a small pool (up to 4) development opportunities

Seed Assets

5-7 Nelson St, Mackay 34 Bourke St, Blacks Beach Add value to land via changing land use (achieving DA)

Investment Strategy

Post DA, the Fund then sold the rights to

Opportunistic investments Loans and ‘distressed’ deals

the option to acquire the land for $540,000 (comprising an assignment fee), on the basis of an indicative agreed valuation of the land at $2.8 million as a result of the increase in value

development of:

generated by the Fund achieving the DA. In addition to $540,000 the fund will be repaid all associated cost incurred in achieving the DA. The

Fund’s proceeds from this investment will be

These two results are an extremely positive outcome

considerably above the Fund’s targeted hurdle

for the Fund and its investors, and demonstrate

rate for investments.

the management team’s ability deliver the Fund’s

T

he Fund has also optioned the land at 34

commercial objectives and goals. The Fund is

Bourke Street, Blacks Beach ($2.5m plus GST),

anticipated to achieve a return materially in excess

Mackay for a purchase price of $2.5m. Since then,

of the 15% hurdle rate once the fund is wound up.

the Fund has recently received the DA for the

2

• 69 beachfront units over 3 buildings. • 51 x 2 bedroom, and 18 x 1 bedroom. • The redesign has significantly increased the expected value of the land to an estimated $4m+.


“riviera mackay” update

overview at a glance

• • • •

Optioned land for a 12 month period. Minimised costs incurred until there was a reasonable basis to expect that the desired outcome was both realistic and had some indicative council support. Option price for $2m + $15k for each apartment approved over and above the initially proposed 52 x apartments, making a total purchase price of $2.26m including option fees and GST. Engaged a market leading team of consultants including architects, engineers, project management, development management, town planning, etc.

PROPOSED DEVELOPMENT (FUND LAUNCH): •

Ground level parking only, with 7 storeys of accommodation comprising 52 apartments.

Successfully managed project time frames, budgets and teams to deliver upon targeted outcomes. Managed to increase the value of the land by altering the DA to allow for 64 x stunning designer riverfront apartments (versus original DA with 43) with better overall design. Removed the need for underground parking, instead using a podium solution, thereby reducing construction costs, reducing risk and enhancing land value. Sale of the option to the land based on an indicative value of the land at $2.8m (versus $2.26m cost, thereby generating a healthy $540,000 return).

• • • •

approved development: •

Ground and first floor podium parking, with 8 storeys of accommodation comprising 64 apartments.

Net Lettable Area (NLA) of approximately 4,200m2.

Gross Floor Area (GFA) of approximately 5,600m2.

11 x 1 bedroom, 39 x 2 bedroom and 1 x 3 bedroom apartments.

16 x 1 bedroom and 48 x 2 bedroom apartments.

48 to 70m2 internal space and 9 to 23m2 of external space for each apartment.

50 to 74m2 internal space and 11 to 107m2of external space or each apartment.

Proposed Floor Plan:

Approved External Render & Typical Floor Plan

Proposed External Plan:

Achieved value add outcome:

Stage 1: contractual right to acquire the site

~ 5 Months Stage 2: Revise DA to include more, smaller apartments

~ 10 Months Stage 3: Sell right to acquire site with enhanced DA 3


“DRIFTWOOD BLACKS BEACH” UPDATE

OVERVIEW AT A GLANCE • • • •

Optioned land for a 12 month period with right to extend to end April 2013. Minimised costs incurred until there was a reasonable basis to expect that the desired outcome was both realistic and had some indicative council support . Option price for $2.5m plus option fees and GST. Engaged a market leading team of consultants including architects, engineers, project management, development management, town planning, etc.

PROPOSED DEVELOPMENT (FUND LAUNCH):

• • • •

Successfully managed project time frames, budgets. and teams to deliver upon stated outcomes. Managed to increase the value of the land . by altering the DA to allow for 69 x absolute beach front designer apartments. The redesign and DA has resulted in the land value. increasing to an estimated $4m. Extended time frame for option to allow for an orderly and coordinated valuation and sales process.

Approved development:

2 x 4 storey residential towers with ground level parking comprising 80 x 1 and 2 bedroom apartments.

GFA of approximately 6,400m2.

Gross Floor Area (GFA) of approximately 6,600m2.

15 x 1 bedroom, 65 x 2 bedroom apartment.

18 x 1 bedroom and 51 x 2 bedroom apartments.

Proposed Floor Plan:

Proposed Site Plan:

Approved External Render:

4

• 3 x 4 and 5 storey residential towers with ground level parking comprising 69 x 1 and 2 bedroom apartments.

Approved External Render:


Future estate investor update

outlook • Fund soon to be paid in full for all costs associated with Riviera Mackay. • Valuation of land to be undertaken for “Driftwood” 34 Bourke Street, Backs Beach. • Fund to assess options for sale of rights to acquire BLACKS BEACH SITE post valuation. • Other fund assets to be reviewed.

• Fund investors to be given option to receive priority rollover entitlement into the upcoming Future Estate Development and Opportunity Fund (FEDOF).

• FEDOF to offer investors the potential to continue to generate enhanced risk adjusted returns from a select portfolio of development and value-add assets.

Contact us at www.futureestate.com.au

1300 future (388 873)

future.estate

info@futureestate.com.au

@futureestate

future estate

Disclaimer This Investor Update document contains general information relating to the Fund and does not contain personal advice or financial product advice. This information has been prepared without taking account of your objectives, financial situation or needs. Accordingly, before acting on this information and making financial decisions, you should consider whether this information is appropriate for you and are recommended to seek independent financial, investment, tax and/or legal advice having regard to your own objectives, financial situation and needs. Any forward looking statements and estimates are provided as a general guide only and should not be relied upon as an indication or guarantee of future performance. There is no guarantee the Fund will achieve returns in excess of forecast return hurdles as at the expiration of the Fund Term or upon the date of winding up of the Fund, and therefore, there is no guarantee that investors in the Fund will receive the targeted returns on their investment. Furthermore, past performance is not a true indicator of future performance. Any past performance information in this document has been given for illustrative purposes only and should not be relied upon as an indication of future performance. 5


Future Estate Development and Opportunity Fund – Expression of Interest Future Estate and its partners are currently in the process of establishing a new Development Opportunity Fund known as the Future Estate Development and Opportunity Fund (FEDOF). FEDOF will be registered as a managed investment scheme with ASIC.

Investment Strategy of FEDOF FEDOF’s investment strategy will be to invest in carefully selected property development projects at various stages of the development cycle. The Fund will seek to generate its returns for investors by: •

adding value to properties through funding and achieving Development Approvals;

funding planning and pre – construction costs on favourable terms;

providing equity or mezzanine debt to development projects; and/or

directly investing in developments where attractive investment opportunities arise.

Exclusive Investment Opportunity for BBDOF No 1 Investors It is currently proposed that investors in BBDOF No 1 be offered the opportunity to receive a priority entitlement to receive units in FEDOF, by exchanging their units in BBDOF No 1 for units in FEDOF. Investors who take up this opportunity will receive a number of units in FEDOF that is based on the indicative value of their units in BBDOF No 1. Such Investors will likely receive additional units in FEDOF due to the increased value of their units in BBDOF No 1 as a result of that fund’s successful investments. An exchange of units in BBDOF No 1 for new units in FEDOF may qualify for capital gains tax exemption under the scrip for scrip capital gains tax rollover relief laws. BBDOF Investors may also be entitled to an exclusive priority entitlement if they wish to increase their investment by investing monies for further units in FEDOF at an issue price of $1.00 per unit.

Expressions of Interest: Please confirm your interest in participating in this exciting investment opportunity by selecting the boxes set out below and returning this form to Future Estate:

Yes, I would be interested in exchanging my units in BBDOF No 1 for new units in FEDOF.

Yes, I would like to increase my investment by acquiring new units in FEDOF.

If Yes, please indicate how much you would be interested in investing $____________ Name of Investor:___________________ Signed by Investor: __________________________ Date: ______________

All investors who are interested in this offer will receive further information regarding the offer so that they can assess the offer and seek their own professional advice. Before acting on and making an investment decisions, investors should seek independent financial, investment, tax and/or legal advice having regard to their own objectives, financial situation and needs. Important Notice: A Product Disclosure Statement (‘PDS’) for the financial products referred to in this document (units in FEDOF) will be made available when the financial products are released or otherwise become available to investors. The PDS shall provide details of the registered managed investment scheme under which these financial products are to be issued. The issuer of the financial products will be Axias Funds Ltd, in its capacity as responsible entity of the registered managed investment scheme. The PDS is expected to made available in or around December 2012 and will be available upon request to Future EstateGroup Pty Ltd at info@futureestate.com.au. A person should closely read and consider the PDS in its entirety before deciding whether to acquire, or continue to hold, the financial products.


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