Fort Street Real Estate Capital Fund I (formerly known as - - PowerPoint PPT Presentation

FSREC Fund I

(formerly known as Australian Property Opportunities Fund)

Fort Street Real Estate Capital Fund I

9 October 2017

FSREC Fund I

This document is prepared by Fort Street Real Estate Capital Pty Limited (ACN 164 101 731) (Investment Manager), a corporate authorised representative (CAR No. 450257) of Walsh & Company Asset Management Pty Limited (ACN 159 902 708, AFSL 450 257), and investment manager for Fort Street Real Estate Capital Fund I (ARSN 163 688 346). This document may contain general advice. Any general advice provided has been prepared without taking into account your

• bjectives, financial situation or needs. Before acting on the advice, you should consider the appropriateness of the advice with

regard to your objectives, financial situation and needs. This document may contain statements, opinions, projections, forecasts and other material (forward looking statements), based

• n various assumptions. Those assumptions may or may not prove to be correct. The Investment Manager and its advisers

(including all of their respective directors, consultants and/or employees, related bodies corporate and the directors, shareholders, managers, employees or agents of any of them) (Parties) do not make any representation as to the accuracy or likelihood of fulfilment of the forward-looking statements or any of the assumptions upon which they are based. Actual results, performance or achievements may vary materially from any projections and forward looking statements and the assumptions on which those statements are based. Readers are cautioned not to place undue reliance on forward looking statements and the Parties assume no obligation to update that information. The Parties give no warranty, representation or guarantee as to the accuracy or completeness or reliability of the information contained in this document. The Parties do not accept, except to the extent permitted by law, responsibility for any loss, claim, damages, costs or expenses arising out of, or in connection with, the information contained in this document Any recipient of this document should independently satisfy themselves as to the accuracy of all information contained in this document.

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Disclaimer

FSREC Fund I

▶ Established July 2013 ▶ Equity raised $160 million ▶ Investment period 5-7 years, after which begin realisation process to return capital ▶ Objective Provide investors with a strong income yield and long-term capital growth potential in high-quality Australian commercial property

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▶ Target assets $15–50 million across Eastern Seaboard ▶ Investment strategy Assets with secure income and long-term capital growth potential Actively manage assets to enhance returns ▶ Competitive advantages Leverage extensive relationships across sector Capital raised allows ability to move quickly Fund objectives Investment strategy

Fund I— Objectives and investment strategy

FSREC Fund I

Before After

Oxford Village, Darlinghurst, Sydney

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FSREC Fund I

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Lake Innes Village Lynbrook Village

Lake Innes Village, Port Macquarie & Lynbrook Village, SE Melbourne

FSREC Fund I

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Windsor Riverview Noosa Village

Windsor Riverview and Noosa Shopping Village

FSREC Fund I

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Sold following completion of repositioning

390 St Kilda Road, Melbourne

FSREC Fund I

▶ Five neighbourhood shopping centres ▶ Well diversified ▶ Yield to investors of 6.2% ▶ Portfolio up 32% since acquisition ▶ Sold 390 St Kilda Road for a profit of 45% ▶ Generating income is difficult in current investment environment ▶ Hard to find high-quality assets with good growth potential ▶ Portfolio provides excellent source of high-quality cashflows ▶ Unitholder meeting to decide on proposal to restructure into a long-term Fund

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Key outcomes What next?

Fund I— Key portfolio outcomes

FSREC Fund I

Majors: Aldi, Fitness First

• No. specialties:

25 Valuation: $90.5 million 1. Recently agreed a lease with JB Hi-Fi, who are due to open before Christmas 2017 2. Extensive refurbishment to be completed by the end of the year 3. In addition to JB Hi-Fi, six speciality tenancies have been leased this year 4. Best retail precinct in the Darlinghurst/Surry Hills part of Oxford Street

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Strengths

Oxford Village, Darlinghurst

FSREC Fund I

1. Charles Sturt University has 900 students, 250 of them now living on campus, and still growing 2. Coles has recently been refurbished and is growing at an exceptional rate 3. No competition within the catchment, with no significant competitors due to enter in the foreseeable future 4. Extra income opportunities being investigated (e.g. food/drive through site)

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Strengths

Lake Innes Village Shopping Centre, Port Macquarie

Major: Coles

• No. specialties:

11 Valuation: $28.6 million

FSREC Fund I

Major: Coles

• No. specialties:

29 Valuation: $38.5 million 1. Town centre for the suburb of Lynbrook 2. Modern supermarket with supporting liquor and speciality retailers 3. Sought after services such as Australia Post and the medical centre have recently renewed, with medical centre also expanding 4. Closest Coles has recently closed down (Hampton Park Square)

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Strengths

Lynbrook Village Shopping Centre, SE Melbourne

FSREC Fund I

1. Best shopping centre in Windsor, with convenient undercroft parking 2. Large format supermarket with supporting liquor, Commonwealth & Westpac banks, and Reject Shop 3. Medical centre has recently doubled in size, and combined with the pharmacy, is a big drawcard with the local demographic

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Strengths

Windsor Riverview Shopping Centre, Windsor, Sydney

Major: Coles

• No. specialties:

30 Valuation: $55 million

FSREC Fund I

1. Best neighbourhood shopping centre in Noosa 2. Supermarket growing at almost double the Woolworths fleet average 3. Strong demand for retail tenants 4. Strict Council controls make it difficult for new competitors to enter the market and existing competitors to expand

13 Strengths

Noosa Village Shopping Centre, Noosa

Major: Woolworths

• No. specialties:

17 Valuation: $31.7 million

FSREC Fund I

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Fund I—Portfolio summary

▶ Fund performance is ahead of schedule ▶ Portfolio up 32% since acquisition ▶ Yield to investors of 6.2% ▶ Well diversified across East Coast, in major metropolitan or strong growth areas ▶ Strong income and capital growth potential moving forward ▶ Difficult to replace a portfolio of this quality

FSREC Fund I

Fund I—Proposal

▶ Management fees – no change in aggregate annual fees payable to the Investment Manager and Fund Manager

• Investment Manager’s fee to increase to 0.54% p.a. of the gross assets of the Trust
• Fund Manager’s fee will decrease an equivalent 0.54% to 0.15% p.a. of the gross assets
• f the Trust
• no change to acquisition or disposal fees

▶ Accrued performance fee – accrued performance fee of $9.8m to be paid to the Investment Manager (calculated from inception to 30 June 2017) – no dilutionary effect on Unitholders ▶ New performance fee from 1 July 2017 – the Investment Manager will receive a performance fee equal to 10% plus GST of the Fund’s outperformance against the AREIT Accumulation Index (vs 20% currently) – calculated annually; paid following release of audited financial statements of the Fund – The initial period will be from the date of the meeting (31 October 2017) until 30 June 2018

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FSREC Fund I

Fund I—Proposal (continued)

▶ Removal of realisation restrictions – current realisation period of 7-10 years from commencement of the Trust is to be removed – term of Investment Management Agreement to be extended to 20 years from approval of Resolutions – in the event the Fund is Listed, the term of the Investment Management Agreement will be fixed at 10 years from date of listing ▶ Special distribution of $50 million – the Fund will pay a special distribution of $50 million, representing approximately $0.50 per Unit to all investors – not conditional to the Proposal proceeding – not impacted by payment of the Accrued Performance Fee should the Resolutions be passed ▶ Additional information – the Resolutions are proposed as ordinary resolutions, requiring a simple majority of votes – the Resolutions are interdependent on each other, therefore if the Proposal is to proceed all Resolutions will need to be passed by Unitholders

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