EAM Caboolture Property Fund - INFORMATION MEMORANDUM - Olivia123
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I N F O R M AT I O N M E M O R A N D U M EAM Caboolture Property Fund Trustee Investment Manager Licensee EFM Nominee Services Pty Ltd Eildon Asset Management Pty Ltd as Eildon Funds Management Limited ACN 638 082 130 Trustee for Eildon Asset Management Trust ACN 066 092 028 Authorised Representative ABN 73 161 997 631 AFSL number 229809 Number 001282215 Authorised Representative Number 001282462
IMPORTANT NOTICE This Information Memorandum (IM, Information Memorandum) The information contained in this IM is general information is dated 7 October 2021 and has been issued by EFM Nominee only and does not take into account the investment objectives, Services Pty Ltd ACN 638 082 130 (Trustee, EFMN, we, us, financial situation or needs of any particular applicant. It is our) in its capacity as trustee for the EAM Caboolture Property important that you read the entire IM before making a decision Fund (Trust). This IM relates to the offer of units in the Trust whether to invest in the Trust. It is also recommended that (the Offer). Neither the Trustee, Eildon Asset Management applicants seek professional advice before deciding whether Pty Ltd ACN 638 441 773 as the trustee of the Eildon Asset to invest in the Trust; and they should consider whether the Management Trust (Investment Manager, Eildon Asset investment is appropriate to their needs, objectives and Management) nor their directors, members, associates or circumstances. Applicants should not treat the contents of this related entities, nor any other person related to the Trustee IM as advice relating to legal, taxation or investment matters or the Investment Manager, guarantees the performance of and should consult their own advisers in this regard. the Trust, the repayment of capital or any particular rate of The Trust is subject to risks and an investment in the Trust is income or capital return from, or increase in the value of, the only suitable for experienced investors with an awareness Trust’s assets. Neither the Trustee or the Investment Manager of the nature and likely quantum of the risk factors set out in has authorised any person to give any information, or to make Section 7. Recipients should independently verify the material any representation in connection with the Offer, which is not contained in this IM and must rely on their own enquiries and contained in this IM. No such information or representation may seek professional advice as to the wisdom, or otherwise, be relied upon as having been authorised by the Trustee or the of an investment in the Trust and as to the accuracy and Investment Manager in connection with the Offer. completeness of this IM. The regulated fundraising (product disclosure statement) No obligation is imposed upon the Trustee, the Investment requirements of the Corporations Act do not apply to this Manager nor any of their directors, members, associates or Offer. The Offer under this IM can only be made to recipients related entities, or any other person related to the Trustee or who qualify as 'wholesale clients' under subsection 761G(7) the Investment Manager, to advise a recipient of any change of the Corporations Act or as 'sophisticated investors' under to, or error in, any of the information contained in this IM. section 761GA of the Corporations Act (refer to the definition of ‘Wholesale Investor’ in Section 10.10), or other investors who Offers under this IM will be made pursuant to Section 911A(2) are not required to be given a product disclosure statement. (b) of the Corporations Act. The Trustee has entered into an arrangement with Eildon Funds Management Pty Ltd ACN 066 This Offer is available to persons receiving the IM within 092 028 (Licensee), holder of Australian Financial Services Australia (whether or not the IM indicates it is available to Licence (AFSL) 229809, for this purpose. All applications must persons in other countries). The Trustee does not represent be sent to the Licensee who will arrange for the issue of Units that this IM may be lawfully offered, in compliance with any pursuant to this IM. The function performed by the Licensee applicable legislation or other requirements, in any other should not be considered as an endorsement of the Offer nor jurisdiction, or pursuant to an exemption available under a recommendation of the suitability of an investment in the another jurisdiction. Trust for any person. The Licensee has not prepared, and is This IM has been prepared to the best of the knowledge and not responsible for the information contained in this IM. The belief of the Trustee. The IM contains some statements of Licensee does not guarantee the success or performance of intent and opinion, many of which may or may not be realised the Trust or the returns, if any, to be achieved by Investors. or be accurate. The Trustee believes the information in this The Licensee has appointed the Trustee as its authorised IM, including statements of intent and opinion, are based on representative and authorised the Trustee to provide various reasonable assumptions. However, to the maximum extent financial services which the Trustee will provide in operating permitted by law, neither the Trustee, the Investment Manager the Trust. nor their directors, members, associates or related entities, nor any other person related to the Trustee or the Investment The Licensee has appointed the Investment Manager as its Manager, represent or warrant the accuracy or completeness of authorised representative and authorised the Investment this IM, or any information contained in it, and no responsibility Manager to provide various financial services which the or liability will be accepted by the Trustee, the Investment Investment Manager will be providing in accordance with Manager, nor their directors, members, associates or related the terms of its Investment Management Agreement with the entities, nor any other person related to the Trustee or the Trustee. Investment Manager for any loss or damage, howsoever arising, Unless otherwise stated, all photographs of property in this IM which results from reliance in whole or in part on such matters. are assets of the Trust, and dollar amounts are expressed in Any references to or inclusion of data prepared by parties Australian dollars. other than the Trustee, the Investment Manager or their related parties are included for information purposes only. The Trustee The defined terms used throughout this IM are set out in the makes no representation of the reliability of this information nor Glossary in Section 11. does it represent that the preparing party accepts any liability to any Investor in the Trust or reader of this IM. EAM CABOOLTURE PROPERTY FUND – INFORMATION MEMORANDUM
EILDON ASSET MANAGEMENT | CABOOLTURE PROPERTY FUND CONTENTS IMPORTANT NOTICE.......................................................IFC 5.6 Proposed Construction and Finishes..................... 26 5.7 Building layout.............................................................. 26 LETTER TO INVESTORS..................................................... 2 5.8 Major Tenancy Profiles and Lease Terms...............27 1 INVESTMENT SUMMARY............................................. 6 5.9 Valuation......................................................................... 28 1.1 Trust Overview................................................................. 6 6 FINANCIAL INFORMATION........................................ 32 2 MANAGEMENT OF THE TRUST................................. 10 6.1 Sources and Application of Funds...........................32 2.1 About the Trustee......................................................... 10 6.2 Forecast Balance Sheet..............................................33 2.2 About the Investment Manager................................ 10 6.3 Key Assumptions for the Forecast............................34 3 DETAILS OF THE OFFER.............................................14 7 RISK FACTORS............................................................ 37 3.1 Investment Opportunity................................................14 3.2 Trust Objective and Investment Strategy................14 8 TAX INFORMATION.................................................... 44 3.3 Trust Structure.................................................................15 9 FEES AND OTHER COSTS.......................................... 46 3.4 Term of the investment and exit strategy................16 9.1 Summary of fees and other costs.............................46 3.5 Size of Offer.....................................................................16 9.2 Waiver or deferral of fees...........................................48 3.6 Minimum Investment Amount.....................................16 9.3 Operating costs.............................................................48 3.7 Total Equity to be Raised..............................................16 9.4 Goods and services tax...............................................48 3.8 Key Dates.........................................................................16 9.5 Related party fees.........................................................48 3.9 Co-investment.................................................................16 9.6 Government taxes and incidental expenses.........48 3.10 Allotment of Units..........................................................16 10 OTHER INFORMATION............................................... 49 3.11 Debt Facility.....................................................................17 10.1 Trust Deed.......................................................................49 3.12 Unit Pricing.......................................................................18 10.2 Investment Management Agreement......................49 3.13 Asset Valuations.............................................................18 10.3 Development Management Agreement.................49 3.14 Distributions.....................................................................18 10.4 Put and Call Option Agreements............................. 50 3.15 Illiquid investment..........................................................18 10.5 Related Party Investments and Transactions......... 51 3.16 Transferring or selling Units........................................18 10.6 Privacy Information Statement.................................. 51 3.17 Reporting..........................................................................19 10.7 Anti-money Laundering Laws.................................... 51 3.18 Future Issues of Units...................................................19 10.8 Foreign Account Tax Compliance Act..................... 51 3.19 How to Invest..................................................................19 10.9 Common Reporting Standards (CRS)...................... 52 4 BENEFITS OF INVESTING IN THE TRUST................. 20 10.10 Wholesale Clients........................................................ 52 10.11 Consents........................................................................ 52 5 PROPERTY INFORMATION........................................ 22 5.1 Property Details: Retail Shopping Centre ............. 22 10.12 Electronic Instructions................................................. 52 5.2 Property Details: Large Format Retail Centre....... 22 10.13 Investor Inquiries...........................................................53 5.3 Property Structure.........................................................23 11 GLOSSARY................................................................... 54 5.4 Location...........................................................................23 12 DIRECTORY................................................................. 56 5.5 Description......................................................................24 EAM CABOOLTURE PROPERTY FUND – INFORMATION MEMORANDUM | 1
LETTER TO INVESTORS Dear Investors, • u pon Practical Completion, distributions are forecast to increase to 7.0% p.a with the potential for capital growth We are very pleased to bring another exciting investment over the term of the investment; opportunity to the market. Eildon Asset Management (EAM) has secured the opportunity to acquire a new Coles • d istributions are expected to attract benefits of tax anchored Shopping Centre and Large Format Retail Centre deferred income; (Property) located in Caboolture, Queensland to be known • s trong national brand tenants including Coles, Chemist as the 'Caboolture Shopping Village' which is anticipated Warehouse, KFC and PETstock catering to consumers to be completed and opened for trading in around daily needs; November 2022. • forecast lease expiry of approximately 10 years (by The Property will be acquired in the EAM Caboolture income) from Practical Completion; Property Fund (Trust). The Trust will offer unitholders: • t he Caboolture Shopping Village will benefit from highway • a ccess to a brand new convenience retail shopping and exposure (with over 60,000 cars passing daily) which is large format centre in an attractive investment structure; strategically located between Brisbane and the Sunshine Coast, approximately 5kms north of the Caboolture CBD; • d istributions paid quarterly in arrears from 31 March 2022 and at approximately 5.0% p.a. until Practical Completion of the • an investment managed by a highly experienced team that Property; 2 | EAM CABOOLTURE PROPERTY FUND – INFORMATION MEMORANDUM
EILDON ASSET MANAGEMENT | CABOOLTURE PROPERTY FUND extends across asset management, property management, The Trust will have an Initial Investment Term of approximately property development and property investment. seven years after the date of this Information Memorandum. This Information Memorandum contains detailed information about The Trust will raise the requisite equity at the outset in the Offer and the Fund’s investment strategy, its operations, order to cost effectively fund the immediate purchase of financial performance and prospects. You should read this IM the Property. Equity, and subsequently bank debt will be carefully and in its entirety. Potential investors with questions on drawn periodically over the development term until the how to complete the Application Form or the contents of the IM development of the Property is complete. The Property has should seek advice from their professional adviser. been independently valued at $55.8 million on completion. Thank you for your consideration of this opportunity to invest The Trust will be managed by Eildon Asset Management Pty in the Trust, which we believe to be very attractive. Ltd as trustee for the Eildon Asset Management Trust ABN Yours faithfully, 71 161 997 631 (Investment Manager or EAM). The Trustee, EFM Nominee Services Pty Ltd is a wholly owned subsidiary of Eildon Capital Group, an ASX-listed Real Estate investment and funds management group. As at the date of the Mark Avery Information Memorandum, Eildon Capital Group has a market Director capitalisation of approximately $50 million and manages over $270 million on behalf of investors. Eildon Asset Management Pty Ltd EAM CABOOLTURE PROPERTY FUND – INFORMATION MEMORANDUM | 3
CABOOLTURE, QUEENSLAND A TRANSFORMATIONAL, MIXED-USE DEVELOPMENT DESIGNED TO SUPPORT AND ENERGIZE THE CABOOLTURE COMMUNITY LOCATION The Caboolture Shopping Village is located approximately 5km north of the Caboolture CBD at the intersection of Pumicestone Road and the M1 Motorway at Exit 157. The Sungate Precinct will be a collection of major retailers, in addition to the Caboolture Shopping Village, including Bunnings, fast food (including McDonalds) and a childcare centre. The site already hosts the Ampol Caboolture Travel Centre. The centre will service the high volume of traffic heading Large Format Retail Centre north to the Sunshine Coast, as well as the large, currently under-serviced catchment of Caboolture North. ACCESSIBILITY EXPOSURE Over 60,000 vehicles Approx. 500m of passing per day frontage from the Bruce Highway CONVENIENCE CUSTOMER 540 HOMES 30 minutes from the 9 million domestic On average, to be built Sunshine Coast & 50 minutes visitors p.a. in the catchment each year from Brisbane CBD until 2041 4 | EAM CABOOLTURE PROPERTY FUND – INFORMATION MEMORANDUM
EILDON ASSET MANAGEMENT | CABOOLTURE PROPERTY FUND SUNGATE PRECINCT Retail Shopping Centre MAIN TRADE AREA Will increase to over 119,350 people by 2041 EAM CABOOLTURE PROPERTY FUND – INFORMATION MEMORANDUM | 5
1 INVESTMENT SUMMARY 1.1 TRUST OVERVIEW The key features and benefits of the Trust set out in this section are a summary only. Applicants should read the whole IM. TOPIC SUMMARY SECTION Key Dates* Offer Opens 7 October, 2021 3.8 Offer Closes 26 November 2021 The Trustee reserves the right to extend the Offer closing date without notice Subscription Monies Due 19 November 2021 Allotment of Units 26 November 2021 Property Transfer Date 26 November 2021 (anticipated) Minimum Initial 7 years from the allotment of Units (26 November 2028) Investment Term Ends *These are indicative dates only. The Trustee may change these dates at its absolute discretion. Key features of the Offer Offer Price $1.00 per Unit 3.5 Minimum Application A minimum investment of $250,000 (unless otherwise determined by the 3.6 Amount Trustee and the Investment Manager at their discretion) Offer Amount $31,400,000 3.7 Co-investment In its absolute discretion, the Investment Manager and/or entities associated 3.9 with the Investment Manager may subscribe for up to 5.0% (or $1,570,000) of equity in the Trust. Eligible Investors Wholesale Clients only 10.10 Key features of the Trust Trust Name EAM Caboolture Property Fund Trustee of the Trust EFM Nominee Services Pty Ltd ACN 638 082 130, an authorised 2.1 representative of Eildon Funds Management Limited ACN 066 092 028, AFSL 229809 (Licensee) Investment Manager Eildon Asset Management Pty Ltd ACN 638 441 773 as trustee for the 2.2 Eildon Asset Management Trust, an authorised representative of the Licensee Developer Eildon Funds Management Limited as trustee for the CVC Caboolture Unit 3.1 Trust (CVC) Nature of the Trust The Trust is an unregistered unit trust established to acquire, develop 3.3 and hold the Property. Investment Objective and The Trust intends to acquire the land for, and then outsource the development 3.2 Strategy of, the Property. Development of the Property will result in an essential services based Retail Shopping Centre (including a separate building for a convenience food 6 | EAM CABOOLTURE PROPERTY FUND – INFORMATION MEMORANDUM
EILDON ASSET MANAGEMENT | CABOOLTURE PROPERTY FUND TOPIC SUMMARY SECTION Key features of the Trust (Cont.) Investment Objective and restaurant subject to Development Approval) and a Large Format Retail 3.2 Strategy (cont.) Precinct (subject to pending Development Approval for subdivision). The investment will provide Investors with a regular quarterly income distribution with the potential for capital growth over the term of the investment. Property The Retail Shopping Centre and Large Format Retail Centre as detailed in 5 Section 5 and to be known as the ‘Caboolture Shopping Village’, located at the intersection of Pumicestone Road and the M1 Motorway at Exit 157, Caboolture, Queensland. Initial Investment Term Investors' initial investment term in the Trust is seven years from the 3.4 allotment of Units date (Initial Investment Term). Units in the Trust are illiquid as there is no market for sale of issued Units. At the end of the Initial Investment Term, the Trustee intends to hold a meeting of Investors to vote on the future of the Trust and determine if the Property should be sold or if the Trust should continue. The Trustee may also recommend selling the Property prior to the end of the Initial Investment Term and return the net proceeds of the sale to Investors early if doing so would be in the best interests of Investors (for example, to take advantage of favourable market conditions). Redemptions and The Trust is an illiquid scheme. Investors will not be able to redeem their 3.15 Withdrawals Units during the Initial Investment Term. Where the Initial Investment Term is extended, the Trustee intends to implement a liquidity strategy to assist the Investors wishing to realise their investment in the Trust. However, the Trustee and Investment Manager do not guarantee that a liquidity strategy would be available for Investors wishing to exit the Trust at the end of the Initial Investment Term or that such a strategy would be capable of fully redeeming or realising the investment of all Investors who wish to exit the Trust at that time. It is not expected that there will be a secondary market for the Units. However, with the consent of the Trustee, Investors may be able to transfer their Units to third parties. Key Benefits Benefits of investing in the Trust include: 4 – forecast attractive distribution yield paid quarterly (7.0% p.a.) from Practical Completion; – newly constructed convenience based retail precinct; – national daily needs retail tenants; – initial WALE of approximately 10 years; – comparatively low transaction costs; – experienced management team with a proven track record; and – low exposure to income volatility. EAM CABOOLTURE PROPERTY FUND – INFORMATION MEMORANDUM | 7
1 INVESTMENT SUMMARY 1.1 TRUST OVERVIEW (CONT.) TOPIC SUMMARY SECTION Key features of the Trust (Cont.) Investor Reporting The Investment Manager will provide half yearly Investor updates in 3.17 relation to ongoing key activities and performance of the Trust. Fees and Other Costs The Investment Manager and the Trustee will be remunerated as outlined 9 in Section 9. Risks As with all investments, an investment in the Trust is subject to risks. In all 7 cases possible, the Trustee and the Investment Manager aim to actively manage risks however some risks are out of their control. If these risks eventuate, they may result in reduced distributions and/or reduced capital value of an investment in the Trust. Risks are discussed in Section 7. Key financial information Target Internal Rate of The Trustee aims to deliver to Investors an internal rate of return 3.1 Return (IRR) (IRR) of over 9.00% per annum over the Initial Investment Term post Practical Completion (pre tax and net of fees). Distributions The forecast distribution to be paid to Investors for the first full year 6.3 post Practical Completion is 7.0 cents per Unit (7.0%). The forecast distribution to be paid to Investors from allotment of Units until Practical Completion is 5.0% annualised. Forecasts are to be read subject to the assumptions in Section 6.3. Distribution Payments The Trustee intends to pay any distributions quarterly in arrears, 6.14 commencing following the quarter ending 31 March 2022. Property Acquisition Price Retail Shopping Centre: $7,000,000 (Land) 6.1 Large Format Retail Centre: $4,000,000 (Land) Debt Facility The Investment Manager has agreed indicative terms for two debt facilities 3.1 1 of up to $30.52 million (at completion) with a major Australian bank for an 18 month construction facility which will roll into a 3 year term loan on completion of construction. Along with the equity contributions made by Investors pursuant to this IM, the debt facility will be used to acquire and develop the Property. Capital Expenditure The Investment Manager has forecast to spend approximately $44,800,000 6 in capital expenditure in the first year of the Trust to construct the Retail Shopping Centre and the Large Format Retail Centre. Details of the application of funds can be found in Section 6. 8 | EAM CABOOLTURE PROPERTY FUND – INFORMATION MEMORANDUM
EILDON ASSET MANAGEMENT | CABOOLTURE PROPERTY FUND EILDON CAPITAL GROUP IS EXCITED TO DELIVER AND MANAGE THE CABOOLTURE SHOPPING VILLAGE, PART OF THE SUNGATE PRECINCT EAM CABOOLTURE PROPERTY FUND – INFORMATION MEMORANDUM | 9
2 MANAGEMENT OF THE TRUST 2.1 ABOUT THE TRUSTEE EFM Nominee Services Pty Ltd ACN 638 082 130 corporate authorised representative number 001282215, is a wholly owned subsidiary of Eildon Funds Management Limited ACN 066 092 028 (Eildon Funds Management or EFM). 2.2 ABOUT THE INVESTMENT MANAGER (a) Overview Eildon Asset Management Pty Ltd as trustee for the Eildon Asset Management Trust corporate authorised representative number 001282462 (Eildon Asset Management or Investment Manager) is a specialist real estate investment manager that actively manages real estate funds on behalf of institutional and retail investors. Established in 2020, Eildon Asset Management is a joint venture between EFM and Strategic Property Partners Investments Pty Ltd ACN 642 062 548 as trustee for the Strategic Property Partners Investments Unit Trust (SPP). EFM is a wholly owned subsidiary of Eildon Capital Group, an ASX-listed Real Estate investment and funds management group. As at the date of the Information Memorandum, Eildon Capital Group has a market capitalisation of approximately $50 million and manages over $270 million on behalf of investors. SPP is an independent property investment group focused on building investor wealth through the acquisition and ownership of high quality income producing commercial properties for Wholesale and Sophisticated investors. EFM and SPP combined manage over $700 million of real estate assets on behalf of wholesale investors. Eildon Asset Management’s strategy is driven by a commitment to investment performance and outstanding service. Eildon Asset Management’s competitive advantage is based on: EXPERTISE TRACK RECORD CO-INVESTMENT OF THE OF THE STRONG AND ALIGNMENT MANAGEMENT MANAGEMENT GOVERNANCE WITH INVESTORS TEAM TEAM The Eildon Asset Management Directors have significant experience in managing real estate investments. Focusing exclusively on real estate over many years provides a depth of understanding which enables the management team to deliver value to investors. Eildon Asset Management’s team possess real estate experience spanning several property cycles. Investment decisions are supported by extensive research and valuation processes that have been developed over many decades of collective experience. Eildon Asset Management’s team has also been involved in a wide range of construction and development projects across different property sectors. Its directors have a strong track record in managing complex, large scale development and construction projects from initial concept to final delivery. Eildon Asset Management has the ability to step in part-way through a development project and manage it through to completion if the need exists. 10 | EAM CABOOLTURE PROPERTY FUND – INFORMATION MEMORANDUM
EILDON ASSET MANAGEMENT | CABOOLTURE PROPERTY FUND (b) Key investment personnel TIM BOYCE / EAM – DIRECTOR Tim has over 30 years’ experience in accounting, finance, property acquisition, divestment, development and management, mergers and acquisitions and consulting. Tim’s previous roles were at PwC, and at Coles Group from 1994 until 2010 culminating as Director of Property. Tim has been a director of SPP since 2013 and MPG Asset Management (Joint Venture between SPP and MPG Funds Management) since 2014. SIMON WILLIAMS / EAM – DIRECTOR Simon has over 30 years of experience in the property and financial services industries with direct experience in capital raising, development, sourcing and structuring property investments for wholesale and sophisticated investors. In addition to this role at SPP, he has been a Director of MPG Asset Management since 2014 and has had an ongoing role to source and acquire service station assets for the APN Convenience Retail REIT. MARK AVERY / EAM – DIRECTOR Mark is an experienced property executive with nearly 20 years of experience gained across private and listed property development and investment groups. Since 2010, Mark has been the Managing Director of EFM and is responsible for all of the group’s real estate investment activities. He was appointed as Managing Director of ASX listed Eildon Capital Group (ASX:EDC) in 2015 and is also the Managing Director (MD) of ASX listed company, CVC Limited (ASX:CVC). JUFRI ABIDIN / EAM – DIRECTOR Jufri works on deal structuring, transaction modelling, due diligence and documentation management that covers a diverse portfolio of real estate assets including residential development, commercial office buildings, sub-regional shopping centres and service stations. Jufri joined Eildon Funds Management in 2016, he previously worked at an ASX listed real estate fund manager where he managed the property portfolios of multiple unlisted real estate investment trusts, consisting up to 60 assets under management, with a combined value of $500 million. EAM CABOOLTURE PROPERTY FUND – INFORMATION MEMORANDUM | 11
2 MANAGEMENT OF THE TRUST 2.2 ABOUT THE INVESTMENT MANAGER (CONT.) (b) Key investment personnel (cont.) LAURENCE PARISI / EFM – CHIEF OPERATING OFFICER Laurence has over 19 years’ experience in various senior roles within the property investment industry, covering both direct and listed real estate. Laurence was previously an Executive Director at Goldman Sachs and Fund Manager of Industrial REIT (ADI.AX), an ASX listed commercial and industrial focused AREIT. Laurence has also worked at APN as the Head of Private Funds responsible for managing four direct retail property funds and two wholesale direct property funds with a combined value of more than $400 million. Laurence holds a Diploma of Business Accounting, a Diploma of Financial Markets and a Graduate Diploma of Applied Finance and Investment. TIFFANY McLEAN / EFM – COMPANY SECRETARY & GENERAL COUNSEL Tiffany is a corporate lawyer with 15 years’ experience in corporate governance, compliance and capital raising and has held roles in private practice in Australia and in-house legal in the UK. She was recently appointed as General Counsel of the Group and has also acted as Company Secretary since January 2021. Tiffany is a member of the Law Society of New South Wales and holds a Bachelor of Laws from Bond University and a Graduate Diploma in Legal Practice from Griffith University. WILLIAM CHEN / EFM – INVESTMENT MANAGER William plays a key role in transaction modelling, structuring, reporting and risk assessment. Prior to joining EDC, William held roles at various banking and investment companies including CBRE, KMPG and CITIC. William graduated from The University of Melbourne with a Bachelor of Commerce (Honours in Finance) and holds a Chartered Financial Analyst (Level III) certification. LULU YANG / EFM – HEAD OF INVESTOR RELATIONS & DISTRIBUTION Lulu has 15 years of experience in property finance and investment advisory. She was previously an Investment Director at Dacland, a Melbourne-based residential land developer, responsible for capital raising, transaction negotiations and investor communications. Lulu began her career in commercial banking with US Bancorp and worked several years as a senior analyst focused on cross-border M&A with Vermilion Partners. Lulu holds a Bachelor of Science degree from the University of South Carolina (Columbia) and graduated Cum Laude with double majors in International Business and Finance. 12 | EAM CABOOLTURE PROPERTY FUND – INFORMATION MEMORANDUM
EILDON ASSET MANAGEMENT | CABOOLTURE PROPERTY FUND THE SUNGATE PRECINCT WILL CONSIST OF A CONVENIENCE BASED SHOPPING VILLAGE ... COLES SUPERMARKET LIQUORLAND CHEMIST WAREHOUSE PETSTOCK BUNNINGS WAREHOUSE KFC SERVICE STATION TAVERN + MORE Note: Some of the above are still subject to a DA. EAM CABOOLTURE PROPERTY FUND – INFORMATION MEMORANDUM | 13
3 DETAILS OF THE OFFER Non-binding terms sheets for debt facilities of up to 3.1 INVESTMENT OPPORTUNITY $30,525,000 have been issued by a major Australian bank. Eildon Asset Management have secured an opportunity This reflects a loan to value ratio (LVR) of approximately 55.0% for the Trust (via its wholly-owned Sub-Trusts) to purchase (on an $55,800,000 ‘as if complete’’ valuation provided by the land and fund the development at the intersection Lawrence Devine of Savills Australia). The financing package of Pumicestone Road and the M1 Motorway at Exit 157 has two phases, the initial ‘development’ phase of up to 18 (Property) to be known as the ‘Caboolture Shopping Village’. months and then a further three years 'investment phase' from The Property is part of a larger precinct known at 'Sungate' Practical Completion. The upfront establishment fee is 0.50% that includes a new Bunnings Warehouse store which is or $152,625. The debt facilities described above are in the currently under construction, the existing Big Fish Tavern and process of being formally documented. an Ampol service station amongst other uses. The Trust is forecast to deliver a cash distribution to Investors Eildon Asset Management intends to raise $31,400,000 for of 7.0 cents per Unit on the first full twelve months post the Trust by issuing 31,400,000 Units at $1.00 per Unit. Practical Completion. The forecast equity IRR (before tax) is approximately 9.0% for the 7 year Initial Investment Term Upon Practical Completion, the Property will consist of a of the Trust. See Section 7 (Financial Information) for the convenience based shopping centre anchored by Coles, assumptions and qualifications that apply to this forecast. Liquorland and Chemist Warehouse (the Retail Shopping Centre), and the possibility of a convenience food restaurant The proposed Initial Investment Term for Investors under intended to be occupied by KFC as well as a large format this IM is 7 years. This time will facilitate the acquisition and retail precinct anchored by PETstock (Large Format Retail construction, together with a trading period upon Practical Centre). The appropriate planning permits and development Completion to allow for income growth. Construction for approvals are at various stages of approval for construction the Caboolture Shopping Village has been contracted at 15 of the Property. In particular, Proposed Lot 44 (which is the months with a fixed time and fixed price construction contract. site for the Large Format Retail Centre) and KFC are each still Upon Practical Completion the Property will feature subject to a Development Approval. approximately 10,000m2 of net lettable area and 475 car Each Sub-Trust will enter into a Development Management spaces. An ‘as if complete’ valuation obtained from Savills Agreement with Eildon Funds Management Limited as reports a completed value of $55,800,000, based upon trustee for the CVC Caboolture Unit Trust ABN 44 857 121 a forecast fully let annual net income of $3.1 million and a 249 (CVC). The Developer is owned 60% by CVC Limited weighted average market yield of 5.6%. The completed WALE and 40% by Vauxhall Pty Ltd and will be appointed under the for the Property is forecast to be 10 years by income. These Development Management Agreement. forecasts assume the Development Approvals for both the Proposed Lot 44 (which is the site for the Large Format Retail Eildon Funds Management will project manage the Centre) and the convenience food restaurant (KFC) forming development and construction according to the planning approvals received from the Moreton Bay Regional part of the Retail Shopping Centre are received satisfactorily. Council, and in accordance with the construction plans and specifications for each of the tenancy areas. 3.2 TRUST OBJECTIVE AND The Developer will pay a coupon fee of 6.50% on all INVESTMENT STRATEGY costs associated with the acquisition and development The Trust intends to acquire the Property to develop and of the Property (Coupon). The Coupon is an amount then for the purpose of generating regular rental income as payable monthly in arrears by the Developer by way of well as the potential for capital growth over the term of the deduction from the Developer’s progress payments in investment. each Development Management Agreement as the Project Manager of the land for the right to access the land to The Trustee intends to acquire the Property through an develop the Property in accordance with the Development arrangement to deliver a completed shopping village. Management Agreement. Each Development Management The Trustee has established two Sub-Trusts wholly owned by Agreement will be formally executed with the Developer the Trust to acquire and hold the Property (see Sections 3.3 following the Closing Date of the Offer. and 10.4 for details). Engineering, technical design, and other physical due The Property will be acquired through equity contributions diligence is being undertaken by independent third party made by Investors and debt financing provided by an consultants. Construction costs have been established Australian based financial institution. via a fixed time and fixed price construction contract with Mainbrace Constructions (Qld) Pty Ltd. These costs have To achieve the Trust’s investment objective, the Investment been substantiated by an independent Quantity Surveyor Manager proposes to, where possible: (QS) (Mitchell Brandtman). 14 | EAM CABOOLTURE PROPERTY FUND – INFORMATION MEMORANDUM
EILDON ASSET MANAGEMENT | CABOOLTURE PROPERTY FUND (a) a ctively manage and promote the Property and its One Sub-Trust will hold the option to acquire the Retail relationships with the tenants and stakeholders, to maximise Shopping Centre land, being Lot 3 and the other Sub-Trust the Property’s income and capital growth potential; will hold the option to acquire the Large Format Retail Centre land, being Proposed Lot 44. (b) ensure the Property is well-presented and maintained; Investors’ money is pooled and used by the Trustee to (c) m inimise the operating costs of the Property to improve purchase and ultimately own the Property and other assets. net property income and ensure rental sustainability for Under the Trust Deed, each Unit will provide the Unit holder tenants; with an equal undivided beneficial interest in the Trust’s net (d) w here appropriate, actively pursue lease extensions with assets as a whole, including the units held by the Trust in the the tenants; Sub-Trusts who will hold the Property, but a Unit holder does not have any interest in a particular asset of the Trust. (e) a ctively seek value adding opportunities for the Property including building extension or rezoning; and The Trust Deed (in addition to the Corporations Act and general law) sets out the Trustee’s powers, duties and (f) r egularly review the Property’s performance to determine obligations, as well as the rights of Investors. Together with if it is appropriate to market the Property for sale in order this IM, the Trust Deed also sets out the framework under to maximise returns to Investors. which the Trust operates. As stated in Section 2 (Management of the Trust), EFM 3.3 TRUST STRUCTURE Nominee Services Pty Ltd is the trustee of the Trust and The Trust is a unit trust established under the Trust Deed. The Eildon Asset Management is the investment manager of the Trust is a wholesale managed investment scheme that is not, Trust. As investment manager, Eildon Asset Management has and is not required to be, registered with ASIC. The Trust has the responsibility of managing the operations of the Trust been established for the purpose of acquiring, developing and its assets, under the fiduciary oversight of the Trustee. and holding the Property via its wholly owned Sub-Trusts. A diagrammatic representation of the Trust is set out below: EAM Caboolture Eildon Asset Property Fund Management Trust EFM Nominee Eildon Asset Services Pty Ltd Management Agreement Management Pty Ltd Development Agreement CVC Caboolture EAM Caboolture EAM Caboolture Unit Trust Shopping Village Trust LFR Trust Eildon Funds EFM Caboolture Shopping EFM Caboolture LFR Management Ltd Village Pty Ltd Pty Ltd Option to acquire Option to acquire real property (Qld) real property (Qld) Lot 3 future Lot 44 EAM CABOOLTURE PROPERTY FUND – INFORMATION MEMORANDUM | 15
3 DETAILS OF THE OFFER 3.4 TERM OF THE INVESTMENT AND 3.8 KEY DATES EXIT STRATEGY The following are key dates in respect of the Offer: The Trustee intends to hold a meeting of Investors within the Event Date* year prior to the expiry of the Initial Investment Term (being 7 years from the allotment of Units to Investors date) to Offer opens 7 October, 2021 vote on the future of the Trust. At that meeting Investors will resolve to either sell the Property or for the Trust to continue. Offer closes 26 November, 2021 A resolution to either sell the Property or to continue the Allotment of Units** 26 November, 2021 investment must be passed by Investors holding more than Lot 3 transfer date*** 26 November, 2021 50% of the Units on issue whether in person or by proxy. If a resolution is passed to continue the Trust, the Trustee Proposed Lot 44 transfer date*** 28 February, 2022 intends to offer a one-off redemption facility to allow those Practical Completion November 2022 Investors who vote, as applicable, against continuing the Trust or in favour of selling the Property a mechanism to exit. Such a redemption facility will be funded through a pro rata * These are indicative dates only. The Trustee may change offer to existing Investors, raising additional equity from new these dates at its absolute discretion. Investors or increasing the existing debt facility of the Trust ** The Allotment Date of Units may be extended for up to (provided such debt does not result in the LVR exceeding 1 month where additional time is required to secure finance a level acceptable to the Trustee or requirements of any for the purposes of settling the acquisition of the Property. financier of the Trust). If Investors vote to sell the Property, *** The Property transfer date is estimated as at the date of then the Property will be sold as part of a strategic and this IM, based on the agreed conditions in the PCOAs (see considered marketing campaign and the Trust subsequently Section 10.4 for more details on the terms of the PCOAs). wound up. The Trustee also has a right to call a meeting of Investors at 3.9 CO-INVESTMENT anytime to recommend the sale of the Property if it believes that market conditions are appropriate. Further, the Trustee In its absolute discretion, the Investment Manager and/or has the right to sell the Property (without Investor approval) entities associated with it may subscribe for up to 5.0% or and, upon approval by Investors holding at least 75% of the $1,570,000 of equity in the Trust. Units on issue, wind up the Trust. However, the Trustee would only exercise this right if it considered that to do so was in the best interests of Investors. 3.10 ALLOTMENT OF UNITS Units will generally be issued (in respect of applications which have not been rejected by the Trustee acting in its 3.5 SIZE OF OFFER absolute discretion) within five Business Days after the date The Offer comprises a total of 31,400,000 Units at the Offer the Offer closes, provided the total $31,400,000 amount has Price of $1.00 per Unit to raise $31,400,000. All Units will be been reached. ordinary units of the same class and will be issued on a fully- If the Offer is over-subscribed, the Trustee, on the paid basis. recommendation of the Investment Manager, may issue less than the number of Units applied for, or to reject any 3.6 MINIMUM INVESTMENT AMOUNT application in its absolute discretion. In either case, the Trustee will refund any surplus Application Money to the The minimum investment amount under the Offer is applicant (without interest) as soon as practicable after the $250,000. relevant Offer close date. The Trustee on the recommendation of the Investment The Trustee may issue Units prior to the date the Offer Manager may accept subscriptions below the minimum closes. Where it does so, all Units will rank equally in all investment at its discretion provided the Investor is an respects. Pending the issue of Units, Application Money will Eligible Investor. not accrue interest for applicants. If the Offer is under-subscribed, the acquisition will not 3.7 TOTAL EQUITY TO BE RAISED proceed and all monies will be refunded to those who have The Trust aims to raise $31,400,000 from subscriptions from applied for Units. Investors under the Offer. 16 | EAM CABOOLTURE PROPERTY FUND – INFORMATION MEMORANDUM
EILDON ASSET MANAGEMENT | CABOOLTURE PROPERTY FUND 3.11 DEBT FACILITY An indicative facility offer has been received from a major Australian bank to provide funding for the development of the Retail Shopping Centre and Large Format Retail Centre on the Property. The funding will be provided in separate tranches, initially for construction funding and then refinanced into an investment loan. The prospective lender’s offer is subject to conditions precedent, including due diligence on the Property and the proposed development, and satisfactory documentation. The intention is for the debt facility to be established prior to the Units under this Offer being allotted. The key terms of the indicative facility offer are set out below. The financing offer has not yet been credit approved and finalised and the terms may be subject to change. FEATURE DESCRIPTION Facility Limit Retail Shopping Centre – Facility 1A: $16,600,000 (to be refinanced by Facility 1B) Retail Shopping Centre – Facility 1B: $22,825,000 Large Format Retail Centre – Facility 2A: $5,600,000 (to be refinanced by Facility 2B) Large Format Retail Centre – Facility 2B: $7,700,000 Term Construction Tranche (Facility 1A and 2A) Up to 18 months from first drawdown of the loan until Practical Completion of the development of the Property. Investment Tranche (Facility 1B and 2B) 36 months from the conversion of the construction tranche. Drawdown Date Construction Tranche On a progress claim basis from first drawdown of the loan until the date of Practical Completion (with first drawdown estimated April 2022). Investment Tranche Single drawdown to commence on Practical Completion (estimated around November 2022). Interest Payment Facility 1A and 2A: Interest only, with interest capitalised on the last day of each month. A line fee is payable monthly on the peak facility limit in that month. Facility 1B and 2B: Interest only, payable monthly. A line fee is payable annually on the facility limit. Interest Hedge Construction Tranche At variable rates. The debt will not be hedged during the construction phase of the loan. Investment Tranche The Trustee may elect to hedge a portion of the debt facility if considered to be advantageous to investors. Interest Rate Base rate as quoted on the Reuters 'BBSY' plus the bank margin. Security The security for both facilities is cross-collateralised and includes: (a) First Registered mortgage from each Sub-Trust over the Property; (b) Interlocking Corporate Guarantee and Indemnity from the Trust and each Sub-Trust; (c) Registered General Security Agreement over all assets of the Trust and each Sub-Trust; and (d) C onstruction tripartite deed between the lender, Trustee and Developer applicable during the construction period until Practical Completion. EAM CABOOLTURE PROPERTY FUND – INFORMATION MEMORANDUM | 17
3 DETAILS OF THE OFFER 3.11 DEBT FACILITY (CONT.) FEATURE DESCRIPTION Financial Covenants Interest Cover Ratio: Minimum 2.5 times at all times. Loan to Value Ratio: Maximum 40% during construction period and 55% during investment period. Loan to Cost Ratio: Maximum 55%, applicable during construction only. Conditions Precedent Standard for a facility of this nature. 3.12 UNIT PRICING All distributions must be paid directly into an Australian bank or an account with a financial institution (where there is a The initial allotment of Units will be at the Offer Price. branch in Australia). Distributions will not be paid by cheque. The ongoing Unit price is calculated by dividing the NAV The Trust will not have a distribution reinvestment plan. (determined by the net market valuation of assets owned, less all liabilities held, including fees, provisions and accrued The Trustee will provide Investors with a distribution expenses in accordance with the Trust Deed) plus transaction statement for each distribution payment made which will costs divided by the number of Units on issue. summarise the components of the distribution and may include a return of capital. Unit prices are generally finalised and published half yearly at 30 June and 31 December. Unit prices are typically calculated using the NAV of the Trust for the end of the last 3.15 ILLIQUID INVESTMENT Business Day of the corresponding month, unless otherwise The Trust will be illiquid. Investors will not be able to redeem determined by the Trustee. their Units during the term of the Trust. The Trustee does not intend to provide for any redemption or withdrawal facility to be available during the Initial Investment Term. Therefore, 3.13 ASSET VALUATIONS once your application has been accepted, you should expect The valuation of all Trust assets is provided or procured by that your investment will remain in the Trust until the Property the Investment Manager. is eventually sold and the Trust is wound up. If Investors elect to continue the term of the Trust beyond the Initial An initial independent valuation has been received as shown Investment Term, then the Trustee may, but is not obliged to, in Section 6 (Property information). The Property will be offer a one-off redemption facility for those Investors who independently valued at least once every 3 years or more vote against the continuation of the Trust. regularly if the Investment Manager considers it necessary, or it is required under the terms of the Trust’s finance. At every There is also no established secondary market for Units in 6-month period, the Property will be valued by Directors of the Trust. the Investment Manager. The costs of such valuations will be paid by the Trustee out of the Trust’s assets. 3.16 TRANSFERRING OR SELLING UNITS 3.14 DISTRIBUTIONS Units in the Trust are illiquid. However, Investors in the Trust may, with the Trustee’s consent, transfer or sell their Unit to a All income of the Trust will be distributed each financial year. willing purchaser. It is the intention of the Investment Manager that the Trust The Trustee will provide Investors with the administrative will calculate distributions quarterly in arrears with the record assistance needed to process a sale of Units, including dates for those distributions being 31 March, 30 June, 30 providing the form to document the transfer. However, the September and 31 December each year. We may vary the Trustee is under no obligation to identify a buyer for an distribution frequency without providing you with notice. Investor’s Units. It should be noted that stamp duty may be The first distribution is expected to be made in respect of the payable on te transfer of Units. Investors should seek their quarter ending 31 March 2022. own professional advice in this regard. 18 | EAM CABOOLTURE PROPERTY FUND – INFORMATION MEMORANDUM
EILDON ASSET MANAGEMENT | CABOOLTURE PROPERTY FUND 3.17 REPORTING To participate in the Offer, your completed Application Form and subscription monies must be received by Offer close Investors will receive the following regular reports about the date of 26 November 2022 (unless extended by the Trustee). Trust and their investments in the Trust: A completed and lodged Application Form, together with (a) a confirmation statement following the allotment of initial the payment for the number of Units applied for, cannot be Units under the Offer; withdrawn (unless the Trustee agrees) and constitutes a (b) distribution statements for each distribution payment; binding application for the number of Units specified in the (c) a report setting out the performance and operation of Application Form, or a lesser number as determined by the the Trust on a half yearly basis; Trustee, on the terms set out in this IM. The Application Form does not need to be signed by an Investor to be binding (d) a d hoc reports on the Property and relevant market on an Investor. Application Forms must be received by the conditions; and relevant Offer close date. If the Application Form is not (e) a n annual tax statement, which will summarise the completed correctly or is received by the Trustee after the distributions paid/payable in respect of that income year relevant Offer close date, the Trustee may in its discretion and the tax components (including any tax deferred either reject it or treat it as valid. component of that distribution). It is important that you read this entire IM and consider The above reports may, with the agreement of the Investor, consulting with your financial or other professional adviser, be delivered electronically. before deciding to apply for Units. 3.18 FUTURE ISSUES OF UNITS The Trustee may issue further Units (this does not include any Units issued under this IM) if it considers to do so would be in the best interest of Investors. The approval of existing Investors will not be required for such issues. The Trustee may raise further equity by a number of methods, including: – the issue of fully or partly paid Units; – d iscounted or non-discounted pro-rata rights offer to all Investors; or – the issue of separate classes of Units. The Trustee may enter into arrangements with underwriters or other entities to support a further issue of Units. Any fees payable to underwriters or other entities to acquire the Units will be paid out of the Trust’s assets. 3.19 HOW TO INVEST The Offer is only open to Wholesale Clients. Subscription for Units can only be made by completing the Application Form attached to or accompanying this IM and submitting by return mail to: Eildon Funds Management Suite 4, Level 6, 330 Collins Street Melbourne VIC 3000 Attn: Lulu Yang EAM CABOOLTURE PROPERTY FUND – INFORMATION MEMORANDUM | 19
4 BENEFITS OF INVESTING IN THE TRUST THE KEY FEATURES AND BENEFITS OF THE TRUST AND ITS UNDERLYING INVESTMENT IN THE PROPERTY INCLUDE: A new Coles anchored shopping centre, being constructed in Caboolture, Queensland to be known as ‘Caboolture Shopping Village’. Detailed in Section 6. Major Tenants on long term leases – Agreements for Lease have been entered into with the following tenants*. Detailed in Section 6. Tenant Sqm Initial Lease Term Commencing Rent Coles Supermarkets Australia Pty Ltd 3,550 12 Years $1,333,055 (including Liquorland)* Chemist Warehouse 1,000 10 Years $400,000 PETstock – note this potential tenant is still 1,500 10 Years $330,000 subject to a pending Development Approval for subdividing Proposed Lot 44 Collins Foods Limited – note this potential tenant 260 10 Years $210,000 is still subject to a pending Development Approval for a KFC (see further explanation in Section 5.3) *A binding Heads of Agreement has been executed, however the final Agreement for Lease is still to be executed. Forecast initial cash yield of 5.0% p.a. throughout the ATTRACTIVE REGULAR construction period and 7.0% p.a. thereafter to be paid quarterly, TAX-DEFERRED RETURNS post Practical Completion. Depreciation and building allowances mean a proportion of this income will be tax-deferred. POTENTIAL FOR Proposed leases with fixed weighted average 1.8% annual rent CAPITAL GROWTH reviews across the asset. Detailed in Section 6.3. EXPERIENCED MANAGE- The Trustee and Eildon Asset Management have significant MENT TEAM WITH A property investment, management and development experience. PROVEN TRACK RECORD Detailed in Section 2. The Trust has an exit strategy at the end of the Initial Investment EXIT STRATEGY Term (being seven years and subject to any extensions). Detailed in Section 3.4. LOW EXPOSURE TO The Tenants pay for the majority of usual property outgoings. INCOME VOLATILITY Detailed in Section 5. 20 | EAM CABOOLTURE PROPERTY FUND – INFORMATION MEMORANDUM
EILDON ASSET MANAGEMENT | CABOOLTURE PROPERTY FUND A NEW COLES ANCHORED SHOPPING CENTRE EAM CABOOLTURE PROPERTY FUND – INFORMATION MEMORANDUM | 21
5 PROPERTY INFORMATION 5.1 PROPERTY DETAILS: RETAIL SHOPPING CENTRE FEATURE DESCRIPTION Classification Retail (primarily non-discretionary) and ancillary uses Land Tenure and Freehold, Lot 3 on Survey Plan 255893 Title Particulars Site Area 30,540m2 Net Lettable Area 6,035m2 Car Parking 355 customer spaces Major Tenants Tenant Sqm Initial Lease Term Commencing Rent Coles Supermarkets Australia Pty Ltd* 3,550 12 Years $1,333,055 Chemist Warehouse 1,000 10 Years $400,000 Collins Foods Limited – note this 260 10 Years $210,000 potential tenant is still subject to a pending Development Approval for a KFC (see further explanation in Section 5.3) Occupancy and WALE – F orecast Weighted Average Lease Expiry is forecast to be approximately 10 years at opening based on current Agreements for Lease (AFL) and interest levels in the available tenancies. – 8 5% of forecast Net Operating Income (NOI) has either been agreed or is in active negotiation. Rental Guarantee – T he Developer is to provide a 36 month rent and outgoings guarantee for any tenancy that remains vacant at the date of Practical Completion. *This Agreement for Lease is still to be executed, but a binding Heads of Agreement is in place. 5.2 PROPERTY DETAILS: LARGE FORMAT RETAIL CENTRE FEATURE DESCRIPTION Classification Large Format Retail Land tenure and Freehold, Proposed Lot 44, to be subdivided from Lot 4 on Survey Plan 309380 Title Particulars Site Area 13,680m2 22 | EAM CABOOLTURE PROPERTY FUND – INFORMATION MEMORANDUM
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