SCA Unlisted Retail Fund 2 - (SURF 2) Product Disclosure Statement 19 April 2017 - SCA Property Group
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SCA Unlisted
Retail Fund 2
(SURF 2)
Product Disclosure
Statement
19 April 2017
ARSN 61 418 0237
Issued by SCA Unlisted Retail Fund RE Limited
ACN 604 416 284 AFSL 473 459
Important Information
Product disclosure statement You should read this PDS in full before deciding Obtaining a copy of this PDS
This product disclosure statement (PDS) relates whether to invest in SURF 2 and take into This PDS may be viewed online on SURF 2’s
to an offer to invest in SCA Unlisted Retail Fund 2 consideration your investment objectives, financial webpage at www.scaproperty.com.au/surf2. If you
ARSN 614180237 (Fund or SURF 2) (Offer). situation and particular needs. Some of the key access the electronic version of this PDS, you should
risk factors that should be considered by prospective ensure that you download and read this PDS in full.
SURF 2 is a registered managed investment scheme
investors are set out in section 9 of this PDS. A paper copy of this PDS is available free of charge
under the Corporations Act. Applicants may submit
There may be risk factors in addition to these to any person in Australia by calling the Investor
an application to subscribe for Units at any time while
that should be considered in light of your Registry on 1300 780 316 (local call cost).
the Offer described in this PDS is open. This PDS
personal circumstances.
is dated 19 April 2017. ASIC takes no responsibility Updated information
for the contents of this PDS and expresses no view No performance guarantee Information in this PDS may change. Information
regarding the merits of the investment set out in this An investment in Units is not an investment in, or a that has changed in relation to SURF 2 that is not
PDS. You should read this PDS in full before deciding deposit with, or any other type of liability of SURF RE materially adverse but which SURF RE wishes
whether to invest in SURF 2. or any other member of Shopping Centres Australasia to provide to Investors, will be made available on
Responsible Entity and issuer of this PDS Property Group (Shopping Centres Australasia Property SURF 2’s webpage at www.scaproperty.com.au/surf2.
Group or SCA Property Group) and is subject to A printed copy of any updated information will be
SCA Unlisted Retail Fund RE Limited (ACN 604 416
investment and other risks, including possible delay available from SURF RE free of charge upon request
284, AFSL 473 459) in its capacity as Responsible
in repayment and loss of income and capital invested. by calling the Investor Registry on 1300 780 316
Entity of SURF 2 (SURF RE or Responsible Entity) is
None of the Responsible Entity, the Manager, the (local call cost).
the issuer of this PDS and the Units offered pursuant
Custodian, other members of SCA Property Group, SURF RE may issue a supplementary product
to this PDS.
or any of their respective directors, officers or disclosure statement to supplement any relevant
Manager associates gives any assurance as to the performance information not contained in this PDS, in accordance
SURF RE has appointed Shopping Centres Australasia of SURF 2 or the underlying assets of SURF 2 or the with its obligations under the Corporations Act.
Property Operations Pty Limited (ACN 160 890 433) repayment of capital from SURF 2 or any particular Any supplementary product disclosure statement
(SCA Operations) to act as the manager of SURF 2 rate of capital or income return from SURF 2. and updated information should be read together
(Manager). IIliquid investment with this PDS. A copy of any supplementary product
Custodian and custodian disclaimer Applicants should understand that SURF 2 is an disclosure statement and other information regarding
illiquid investment. As a result, a return of capital will SURF 2 will be made available on SURF 2’s webpage
SURF RE has appointed Shopping Centres Australasia at www.scaproperty.com.au and a printed copy will
Property Group RE Limited (ABN 47 158 809 851, only be possible where assets of SURF 2 are sold or
an alternative liquidity strategy is implemented by the be available from SURF RE free of charge upon request.
AFSL 426 603) as the custodian of SURF 2 (Custodian).
The Custodian’s role is limited to holding the assets Responsible Entity. Continuous disclosure
of SURF 2 as agent of the Responsible Entity. Forward looking statements In accordance with ASIC Regulatory Guide 198
The Custodian has no supervisory role in relation ‘Unlisted disclosing entities: Continuous disclosure
This PDS contains forward looking statements.
to the operation of SURF 2 and is not responsible obligations’, SURF RE advises that it will fulfill its
These statements can be identified by the use of
for protecting your interests. The Custodian has continuous disclosure requirements by way of
words such as ‘anticipate’, ‘believe’, ‘expect’, ‘project’,
no liability or responsibility to you for any act done website disclosure which complies with ASIC’s
‘forecast’, ‘estimate’, ‘likely’, ‘intend’, ‘should’, ‘could’,
or omission made in accordance with the terms of good practice guidance. Investors may access
‘may’, ‘target’, ‘predict’, ‘guidance’, ‘plan’ and other
the Custodial Services Deed. The Custodian makes material information regarding SURF 2 from
similar expressions. Indications of, and guidance
no statement in this PDS and has not authorised SURF 2’s webpage at www.scaproperty.com.au/surf2.
on, future earnings and financial position and
or caused the issue of it.
performance are also forward looking statements. Date of information
Eligibility and selling restrictions Preparation of these forward looking statements Unless otherwise specified, all information contained
The offer of Units made in this PDS (Offer) is was undertaken with due care and attention. in this PDS is stated as at the date of this PDS.
available only to those persons receiving this However, forward looking statements are subject
PDS (electronically or otherwise) within Australia. to known and unknown risks, uncertainties and other Pictures of properties in the PDS
No action has been taken to register Units or important factors that could cause the actual results, Unless otherwise specified, all pictures of properties
otherwise permit a public offering of Units in any performance or achievements of SURF 2 to be in the PDS are actual pictures of the buildings or
jurisdiction outside Australia. materially different from those expressed or implied properties which will be the assets of SURF 2. Actual
in such forward looking statements. Some of the risk pictures of buildings or properties were taken in 2017.
This PDS does not constitute an offer or invitation factors that impact on forward looking statements
in any place in which, or to any person to whom, in this PDS are set out in Section 9. Other than as Defined terms and financial information
it would not be lawful to make such an invitation. required by law, none of SURF RE, its associates Definitions of certain terms used in this PDS appear
The distribution of this PDS in jurisdictions outside or their respective directors, officers, employees in the Glossary in section 17. References to currency
Australia may be restricted by law. Persons who or advisers or any other person gives any assurance are to Australian currency unless otherwise specified,
come into possession of this PDS who are not in that the events expressed or implied in any forward and references to times are to Australian Eastern
Australia should seek advice on, and observe any looking statements in this PDS will actually occur. Daylight Time (AEDT) unless otherwise specified.
such restrictions in relation to, the distribution or You are cautioned not to place undue reliance on Unless otherwise specified, the occupancy levels
possession of this PDS. Any failure to comply with those statements. and lease expiry profiles of the Property Portfolio
any such restrictions may constitute a violation of are weighted and/or determined by their contribution
applicable securities law. No representations other than contained to gross lettable area. Unless otherwise stated or
in this PDS implied, references to dates or years are financial
Other than as permitted by law, investments in
the Fund will only be accepted following receipt You should seek your own independent financial advice year references. Any discrepancies between total
of a properly completed Application Form. and you should only rely on the information in this and sums and components in tables contained
PDS when deciding whether to invest in SURF 2. in this PDS are due to rounding.
No cooling off period No person is authorised to give any information or to
No cooling off rights apply to an application for make any representation in connection with SURF 2 Questions
Units. This means that, in most circumstances that is not contained in this PDS. Only information If you have any questions about the PDS please
you cannot withdraw your Application Form once or representations contained in this PDS may be contact SCA Property Group on 1300 780 316
it has been lodged. relied upon as having been authorised by SURF RE (inside Australia) or +61 2 8016 2885 between
in connection with SURF 2. the hours of 8.30am and 5.00pm Monday to Friday
Note to prospective investors Sydney time (excluding public holidays).
The information contained in this PDS is not financial
product advice. The information contained in this
PDS is general information only and does not take
into account your investment objectives, financial
situation and particular needs.
Contents
Important Dates 2
1. Letter to Investors 3
2. Key Features of the Fund 4
3. How to Invest 5
4. Investment Overview 6
5. Property Portfolio 10
6. Fund Structure and Policies 21
7. SCA Property Group 26
8. Board and Management Team – SURF 2 29
9. Risks 31
10. Fees and other costs 36
11. Financial Information 41
12. Investigating Accountant’s Report 47
13. Independent Valuation of the
Property Portfolio 54
14. Taxation 60
15. Material Agreements 64
16. Additional Information 71
17. Glossary 76
18. Application Form and Instructions 80
Corporate Directory IBC
Woolworths Katoomba – internal
1
Important Dates
Offer Open Date 19 April 2017
Closing Date Earlier of:
• Receipt of the Total Offer Amount; and
• 19 May 2017, 5:00pm in Sydney
Allocation will be on a “first-in” basis
First Distribution Period From the Closing Date to 30 June 2017
First Distribution Date End of July 2017
These dates are indicative only and may be changed by the Responsible Entity. Changes may include extending or reducing
the period the Offer is open.
Offer Statistics
Issue Price (per Unit) $1.00
Minimum Application Amount $25,000
Amount to be raised under the Offer $29.5 million
Forecast Net Asset Value per Unit at Closing Date $0.96
Forecast initial distribution yield 7.0%
Initial LVR 48.9%
Comparisons of SURF 2 distribution returns1
7.0%
4.1%
2.6%
2.2%
5 year Australian Average of big 4 banks ASX 200 yield4 SURF 2
Government bonds2 5 year term deposit3
1. The chart above shows relative yields of different investment classes in comparison to the forecast distributions of SURF 2.
It is important to note that investments offering greater returns may have additional risk.
2. As at 31 March 2017. Source Bloomberg.
3. Average of CBA, Westpac, NAB and ANZ term deposits for $25,000 paying interest monthly as at 31 March 2017.
4. FY17 DPS yield, weighted by market capitalisation. As at 31 March 2017. Source Bloomberg.
2 SCA Unlisted Retail Fund 2 Product Disclosure Statement 19 April 2017
1. Letter to Investors
SCA Unlisted Retail Fund 2
Level 5 50 Pitt Street
Sydney NSW 2000
scaproperty.com.au
Dear Investor
On behalf of SCA Unlisted Retail Fund RE Limited (“SURF RE”), it is our pleasure to invite you to invest
in SCA Unlisted Retail Fund 2 (“SURF 2”), an unlisted property trust comprising two retail properties in
New South Wales, namely Katoomba Marketplace and Mittagong Shopping Village (the “Property Portfolio”).
The Offer to invest in SURF 2 is open from 19 April 2017 until the earlier of the Offer being fully subscribed
and 19 May 2017 (“Closing Date”). SURF RE has absolute discretion to amend the Closing Date of the Offer,
which may occur, for example, where the Offer is fully subscribed prior to 19 May 2017.
SURF 2 aims to provide Investors with sustainable and stable income and the potential for capital growth
through an investment in the Property Portfolio. The Katoomba Marketplace is a freestanding centre fully
leased to Woolworths Limited, trading as a Woolworths supermarket and a Big W discount department
store. The anchor tenant of the Mittagong Shopping Centre is Woolworths Limited (trading as Dan Murphy’s),
and the centre currently has five specialty tenants.
While this investment is subject to risk, SURF 2 offers:
• Attractive yield: a forecast initial distribution yield of 7.0% per annum
• Secure lease covenant: 94% of income backed by long term leases to Woolworths Limited with a weighted
average lease expiry greater than 17 years, as at 31 March 2017
• High quality retail properties: average age of 6.5 years
The Property Portfolio was valued at $55.1 million by independent valuer (Savills) as at March 2017 which reflects
a weighted average capitalisation rate of 6.45%. The Property Portfolio will be acquired on arm’s length terms
from SCA Property Group at that valuation.
SURF 2 will have an initial fund term of 5 years. It may be extended if a Special Resolution is passed by Investors.
Irrespective of the extension of SURF 2, one or both of the Properties may be sold before the expiry of the fund
term if such disposal is considered to be in the best interests of Investors.
SURF RE is a 100% owned subsidiary of SCA Property Group. As at 31 March 2017, SCA Property Group owned
and managed a total portfolio of 79 retail properties and shopping centres anchored by Woolworths Limited
and Wesfarmers Limited. SCA Property Group is listed on the Australian Securities Exchange (ASX: SCP) with
a market capitalisation of over $1.6 billion as at 31 March 2017.
It is important that you read this Product Disclosure Statement carefully before deciding whether to invest
in SURF 2. You should consider consulting your financial adviser or other professional advisers.
Yours faithfully
Andrew Stevenson Anthony Mellowes
Independent Chairman CEO and Executive Director
SCA Unlisted Retail Fund RE Limited SCA Property Group RE Limited
Executive Director
SCA Unlisted Retail Fund RE Limited
3
2. Key Features of the Fund
Attractive yield of 7.0%
SURF 2 is forecast to deliver an initial distribution yield of 7.0% for the years ending 30 June 2018 and 30 June 2019,
with distributions payable quarterly in arrears.
This forecast distribution level compares favourably to prevailing income returns on term deposits, government bonds
and shares in companies listed on the ASX.
In addition, approximately 30% of the distributions are expected to be “tax deferred”. For further information on the tax
implications of investing in SURF 2, refer to section 14.
Secure lease covenants backed by Woolworths Limited
Woolworths Limited is the lessee in respect of 94% of the current rental income of SURF 2. There are two leases
with Woolworths Limited as the lessee, a combined lease for Woolworths and Big W at Katoomba, and the other for
Dan Murphy’s at Mittagong. The remaining terms of these leases range from 15 to 18 years, with the Property Portfolio
having a weighted average lease expiry (“WALE”) of greater than 17 years.
On the basis of the rent review provisions in the leases, the potential for growth in distributions over the 5 year term
of SURF 2 is expected to be minimal. This should be balanced with considering the credit worthiness of Woolworths
Limited, the long-term nature of the leases as well as lease extension options, as outlined in section 5.
The remaining 6% of rental income comes from five specialty tenants at the Mittagong Shopping Village. For more
information in relation to the specialty tenancies, see section 5.
High quality retail properties
SURF 2 will hold two retail properties with an average age of 6.5 years as at 31 March 2017. The anchor tenants are
a Woolworths supermarket, a Big W discount department store, and a Dan Murphy’s liquor store. The anchor tenant
under each lease is Woolworths Limited. For more information in relation to the Properties, see section 5.
Experienced manager
The Manager of SURF 2 is SCA Operations, a wholly owned subsidiary of SCA Property Group.
SCA Property Group was demerged out of Woolworths Limited and listed on the ASX in December 2012 as an
independent Australian real estate investment trust (“A-REIT”). As at 31 March, 2017, SCA Property Group managed
over $2.2 billion of retail assets in Australia and had a market capitalisation of over $1.6 billion. Since listing SCA
Property Group has been one of the strongest performing A-REITs on the ASX, generating a total unitholder return
in excess of 100% for its investors.
SCA Operations is also the manager of the SURF 1 unlisted property fund, which has delivered its unitholders
an annual return in excess of 8% since it launched in October 2015.
Risks
There are risks associated with this investment, including property investment risks, diversification and tenant
concentration risks, debt and refinancing risks, fund investment risks and other general investment risks.
For more information in relation to these risks, please refer to section 9.
4 SCA Unlisted Retail Fund 2 Product Disclosure Statement 19 April 2017
3. How to Invest
1.
Read this document
You should read this PDS in full before deciding whether
to invest in SURF 2. You should consider consulting your
financial advisor or other professional advisors.
2.
Consider the Offer
Pay particular attention to the risks in section 9 and
other information in this document and seek appropriate
professional advice.
3.
Complete the Application Form
Applications can be completed online (For Australian investors
only) or by completing and returning the Application Form
in section 18.
You can access the Application Form online at
www.scaproperty.com.au/surf2.
4.
Lodge your Application Form
Please lodge your Application Form and payment with
the Investor Registry:
Online:
www.scaproperty.com.au/surf2
Or
By mail:
SURF 2
C/- Boardroom (Victoria) Pty Limited
GPO Box 3993
Sydney NSW 2001
Or
In person:
Level 12, 225 George Street
Sydney NSW 2000
For any queries regarding the Application Form,
please contact the Investor Registry on:
Investor Services: 1300 780 316
+61 2 8016 2885 (from outside Australia)
Email: SURF@boardroomlimited.com.au
Website: www.boardroomlimited.com.au
5
4.
Investment
Overview
Katoomba Marketplace
– Main entrance
6 SCA Unlisted Retail Fund 2 Product Disclosure Statement 19 April 2017
4. Investment Overview
Important Dates Section(s)
Offer Open 19 April 2017 6.1
Offer Close Earlier of receipt of the Total Offer Amount or 19 May 2017, 5.00pm in Sydney
SURF RE has the absolute discretion to vary the times and dates of the
Offer, including to close the Offer early, withdraw or suspend the Offer
or extend the Closing Date, without notice
Allocation will be on a “first-in” basis
Distribution frequency Quarterly, with the first distribution to be paid by the end of July 2017 6.5
and first distribution for the period from the Closing Date to 30 June 2017
Key Features of the Offer Section(s)
Total Offer Amount $29.5 million 6.1
SURF RE has the discretion to vary the Total Offer Amount
Issue Price $1.00 per Unit 6.1
Minimum Application $25,000 and in multiples of $1,000 thereafter
Amount per Investor1
SURF RE has the discretion to reject in full, accept lower amounts or scale 6.1
back any Application for Units
Net Tangible Assets (NTA) Forecast to be $0.96 per unit 6.1
per Unit at Closing Date
Key Features of SURF 2 Section(s)
What is SURF 2? SURF 2 is an unlisted closed end property unit trust registered as a managed 6.1, 5
investment scheme
SURF 2 has entered into conditional contracts to acquire two freestanding
retail properties with 94% of current rental income from Woolworths Limited.
As at 31 March 2017, the properties have a WALE of greater than 17 years
Investment objective SURF 2 aims to provide Investors with sustainable and stable income 6.2
and the potential for capital growth through an investment in a Property
Portfolio with long term Woolworths leases (trading as a Woolworths
supermarket, BIG W and Dan Murphy’s) located in Katoomba and
Mittagong, New South Wales
SURF RE and Manager The Responsible Entity of SURF 2 is SCA Unlisted Fund RE Limited 6.4
ABN 42 604 416 284, AFSL 473 459 (SURF RE)
The Manager of SURF 2 is Shopping Centres Australasia Property
Operations Pty Limited (ABN 83 160 890 433), which is a wholly owned
subsidiary of SCA Property Group
SCA Property Group Shopping Centres Australasia (SCA Property Group) comprises two internally 7
managed real estate investment trusts (REITs) owning a portfolio of quality
sub-regional and neighbourhood shopping centres and freestanding retail
assets focused on convenience retailing across Australia. SCA Property
Group is listed on the Australian Securities Exchange under the code ‘SCP’
As at 31 March 2017, the SCA Property Group managed over 79 retail
properties with a market capitalisation of over $1.6 billion
Term of SURF 2 SURF 2 will have an initial 5 year term ending on the 5th anniversary of the 6.3
Closing Date
7
4. Investment Overview
Key Features of SURF 2 (continued) Section(s)
Investment strategy To achieve the investment objective, SURF RE will: 6.2
• invest in the Property Portfolio
• actively manage the Property Portfolio to ensure that its progress and
performance are consistent with the investment objective of SURF 2
• where appropriate, sell one or both of the properties if SURF RE considers
it in the best interests of Investors
Distributions Forecast2 6.5
An annual Distribution yield of 7.0% is forecast during the Forecast Period
Frequency 6.5
The first distribution will be made by the end of July 2017 in respect of the
period from Closing Date to 30 June 2017. Thereafter, distributions will be
payable quarterly in arrears
Tax-deferred 6.5, 14
The distribution payments for the years ended 30 June 2018 and 2019
are expected to be tax-deferred by approximately 30%
Debt Finance A major Australian bank has provided SURF 2 with a debt facility for the
purposes of partially funding the acquisition of the Property Portfolio
The term of the debt facility is 5 years
SURF 2 has entered into an interest rate swap with a face value of
$13.6 million to fix financing costs for approximately 50% of the debt facility
amount for approximately the first 2 years of the 5 year term of SURF 2
The annual total financing costs (including the fixed interest payable under 6.4
the interest rate swap) of the debt facility until 30 June 2019 is expected
to be approximately 4% per annum
Cooling-Off There is no cooling off period 6.1
Risks As with any investment, there are a number of risks inherent in an investment 9
in SURF 2. The key risks are discussed in section 9 and include:
• Property investment risks – Including the risk that property values decline
and the risk that there is a decrease in or suspension of Fund income due
to a specialty tenancy vacancy or default by one or more tenants
• Diversification and tenant concentration risk – Including financial decline
in the credit quality of the major tenant, Woolworths Limited, without
a replacement tenant of similar credit quality being obtained
• Debt and refinance risks – There is a risk that the terms of the debt
covenants may be breached by a decline in property values. In addition,
there is a risk that if refinancing is required to extend the term of the debt
beyond its 5 year term, the refinancing may be on less favourable terms
thereby adversely affecting distributions
• Fund investment risks – Including the limitations on the liquidity of your
investment, investment horizon, gearing, diversification risk and the risk
that additional transaction costs may be levied
• General investment risks – Including that the economy and market
conditions may affect asset and property returns and values
8 SCA Unlisted Retail Fund 2 Product Disclosure Statement 19 April 20174. Investment Overview
Fees and Expenses Section(s)
Certain one-off and ongoing fees are payable in relation to an investment in SURF 2. These are set out in detail
in section 10. The fees payable to SURF RE and/or the Manager comprises the following:
Contribution fee Nil 10
Management costs Estimated at 0.95% per annum of the Gross Asset Value (GAV) comprising: 10
• Base management fee of 0.25% per annum of GAV
• Investment management fee of 0.45% per annum of GAV
• Costs and expenses, estimated to be approximately 0.25% per annum
of GAV
Performance fee 20% of the portion of outperformance of SURF 2 over an Internal Rate 10
of Return (IRR) hurdle of 10% per annum based on an Issue Price of $1.00
per Unit, payable to the Manager
Establishment Fee 1.50% of the independent valuation of the Property Portfolio included in this 10
PDS, payable to the Manager
Disposal fee 1.00% of the gross sale price of a Property payable to the Manager 10
Development fee Nil 10
Leasing fee Nil 10
1. SURF RE may waive the minimum application amount at its discretion.
2. Subject to unforeseen events.
95.
Property
Portfolio
Mittagong Shopping Village
– Main Street entrance
10 SCA Unlisted Retail Fund 2 Product Disclosure Statement 19 April 20175. Property Portfolio
SURF 2 consists of two retail properties located in Katoomba and Mittagong, New South Wales.
Both properties are anchored by Woolworths Limited. The usage comprises a Woolworths supermarket, Big W
discount department store and Dan Murphy’s liquor store with a weighted average lease expiry of 17 years.
Portfolio statistics as at 31 March 2017
Number of properties 2
Property Portfolio value1 $55.1 million
Portfolio capitalisation rate 6.45%
Occupancy2 100%
Average property age 6.5 years
Woolworths Limited leases as a % of gross income 94%
Forecast annual rent – Anchor tenants (Woolworths Limited) $3.7 million
Forecast annual rent – Specialty tenants $0.3 million
Portfolio WALE 3
17.0 years
Anchor Tenant WALE 3
18.0 years
Total GLA 4
11,954 sqm
Total site area (including car parking) 18,605 sqm
Portfolio lease expiry profile
Lease expiry by calendar year as a % of gross income
WOW/Big W
78%
Specialty tenants End of Fund Term
Dan Murphy’s
15%5. Property Portfolio
Property details as at 31 March 2017
Building Independent
Completion Other GLA Site Area Valuation as
Asset Date Anchor Tenant Tenants Occupancy WALE sqm Inc Parking at March 2017
Katoomba 2014 Woolworths N/A 100% 18.5 9,719 11,991 $44.7 million
Marketplace Limited trading
as Woolworths
supermarket and
Big W
Mittagong 2007 Dan Murphy’s Pharmacy 100%1 11.9 2,235 4,735 $10.4 million
Shopping Food
Village Travel
Lease summary
Remaining Forecast Gross
lease tenure annual rent Lettable
Tenancy Lease Lease (at 31 March (year to Review date Area (GLA)
Asset Tenant Number start date expiry date 2017) 30 June 2017) and terms sqm
Katoomba, Woolworths 10 Apr 2014 9 Oct 2035 > 18yrs + $3,108,482 10 April 2019 9,719
Regional Limited t/a 4x10 year + 5 yearly
New South Woolworths options minimum
Wales Supermarkets 5% uplift
& BIG W
(Single lease)
Mittagong, Woolworths T1, T2, 1 Nov 2012 31 Oct 2032 > 15yrs + $611,029 1 Nov 2017 1,588
Regional Limited t/a T8 4x10 year Base rent+
New South Dan Murphy options Turnover/3
Wales
Thai T3, T7 27 Aug 2015 26 Aug 2018 1.4 years $51,216 Annual review 146
Restaurant 4%
Japanese T4 12 Apr2014 11 Apr 2024 7.0 years $26,051 Annual review 73
Restaurant 4%
NRMA T5 1 Aug 2016 31 Jul 2019 2.3 years $36,728 Annual CPI 73
review
Pharmacy1 T6 1 May 2016 30 Apr 2017 0.1 years $85,995 N/A 185
Blockbuster 1
T9 7 Jun 2016 6 Jun 2017 0.2 years $51,337 N/A 170
Shoppers Licence 30 Jan 2016 29 Jan 2021 4.8 years $3,063 Annual review 0 (Sign)
Media 5%
Agreement for Lease summary
Remaining Gross
lease tenure Lettable
Tenancy Lease Lease (at 31 March Forecast Area (GLA)
Asset Tenant Number start date expiry date 2017) annual rent Review date sqm
Mittagong, Pharmacy T9 1 Sep 2017 30 Aug 2022 5 years $99,750 Annual 170
Regional CPI Review
New South
Wales
1. Occupancy calculated at 100% as rental guarantee applies to lease expiries in T6 and T9 until 30 June 2019.
12 SCA Unlisted Retail Fund 2 Product Disclosure Statement 19 April 20175. Property Portfolio
Katoomba Marketplace
Location 30–34 Waratah Street, Katoomba, New South Wales
Building completion date April 2014
Parking 457 on grade and basement car spaces (including 124 leasehold)
Catchment Area Katoomba Marketplace is a freestanding shopping centre anchored by a Big W discount
department store and a Woolworths supermarket with no specialty stores. The centre is
located in Katoomba, the retail, commercial and administrative hub of the Blue Mountains.
Katoomba Marketplace is situated approximately 100 kilometres by road from the Sydney
Central Business District and approximately 50 kilometres from Penrith CBD. Katoomba
is within the Local Government Area administered by the Blue Mountains City Council.
The site is easily accessible behind the main retail strip along Katoomba Street and is
adjacent to other major tenants including Target Country, Coles and Aldi. The main retail
strip includes a number of retail and non-retail shopfronts.
Both on grade and undercroft car parking is provided on site with accessibility from Pioneer
and Parke Streets. There is both travellator and lift access from the undercroft carpark to
the shop front of both tenancies.
Katoomba is an established residential suburb and a popular tourist destination with its
scenic mountain views and bush walking trails attracting domestic and international tourists.
Type Freestanding
Independent Valuation ($m) 44.7
Property GLA (sqm) 9,719
Anchor Tenant Woolworths Limited
trading as Woolworths
Supermarkets & Big W
Site area incl 13,870
parking (sqm)
Specialty tenants N/A
Capitalisation Rate 6.50%
Occupancy 100%
Lease Expiry (years) 18.5
135. Property Portfolio Katoomba marketplace local context 14 SCA Unlisted Retail Fund 2 Product Disclosure Statement 19 April 2017
5. Property Portfolio
Katoomba trade area and competition map
Trade Area Analysis
Trade population 77,460 Location IQ, one of Australia’s leading economic location
advising consultancies, considers Katoomba Marketplace
Trade population growth 80,560 by 2026
will serve an extensive Primary Trade Area and substantial
Trade population annual 0.3% Secondary Trade Area, as set out in the Katoomba
growth rate Marketplace Main Trade Area and Competition Map above.
Location IQ has advised that a shopping centre with
Average household size 2.4
a discount department store serves a main trade area
Average household income $81,137 population in the order of 50,000 persons. The Katoomba
Marketplace main trade area population of 77,460 is
Average income per capita $33,295
somewhat larger than the benchmark.
Average age 40.5
The centre is the largest shopping centre within the
Average household 42.5% couples with primary sector and the Big W is the only full-line discount
dependent children department store offer within a 30km radius. The nearest
other full-line discount department store is Target at Lithgow,
23.9% couples
some 38km to the north-east. A smaller Target Country
without children
of 1600 sqm is located adjacent to Katoomba Marketplace.
12.8% single occupant
Home ownership 78% owned/mortgaged,
22% rented
Source: Location IQ
155. Property Portfolio
Mittagong Shopping Village
Location 126–130 Main Street, Mittagong, New South Wales
Building completion date December 2007
Parking 48 on grade car spaces
Catchment Area Mittagong Shopping Village is a convenience centre anchored by Dan Murphy’s and
5 specialty tenants. It is located within the commercial centre of Mittagong, a town located
in the Southern Highlands district of New South Wales. The region is a popular tourist
destination between Sydney and Canberra, located some 130 kilometres to the south
west by road from the Sydney Central Business District, 140km north-east of Canberra
City Centre and 6 kilometres north east of Bowral. Mittagong is within the Local
Government Area administered by Wingecarribee Shire Council.
The site is located at the southern end of the main retail and commercial strip within
Mittagong that extends along both sides of the Old Hume Highway. The site is situated
on an irregular allotment bounded by Main Street to the north, Pioneer Street to the west
and Bowral Road to the south.
Development in the surrounding area comprises a retail and commercial precinct as well
as low density residential development to the west.
Highlands Marketplace, the local sub-regional shopping centre located on the Old Hume
Highway, is approximately 1 kilometre north west of Mittagong Shopping Village.
Type Freestanding
Independent Valuation ($m) $10.4m
Property GLA (sqm) 2,235
Anchor Tenant Woolworths Limited
trading as Dan Murphy’s
Site area incl parking (sqm) 4,735
Specialty tenants 5
Capitalisation Rate 6.25%
Occupancy1 100%
WALE (years) 11.9
1. Occupancy calculated at 100% as rental guarantee applies to lease expiries in T6 and T9 until 30 June 2019.
16 SCA Unlisted Retail Fund 2 Product Disclosure Statement 19 April 20175. Property Portfolio
Mittagong centre layout
The floor plan shows the centre layout for the shopping centre which fronts onto the Old Hume Highway.
Dan Murphy’s accounts for approximately 71% of the total centre floor space and is a key destinational tenant.
There is an executed Agreement for Lease for the relocation of Blooms the Chemist from shop T6 to the current
Blockbuster tenancy T9. The handover date for T9 is 1 July 2017. There is a rental guarantee set out in the Contract
of Sale and SURF 2 will receive a maximum of $200,000 to cover rental vacancy and tenancy incentives from the
vacation date of shops T6 and T9 until 30 June 2019.
Mittagong village local context
175. Property Portfolio
Mittagong trade area and competition map
Location IQ has indicated that typically in non-metropolitan locations, one Dan Murphy’s liquor outlet requires a population
catchment of around 35,000 to 40,000 persons in order to be successful. The Mittagong Village main trade area population
of 49,970 is somewhat larger than the benchmark and this is the only large format liquor outlet within the main trade area.
Trade area analysis
Trade Population 49,970 Average income per capita $32,475
Trade population growth 55,720 by 2026 Average age 42.1
Trade population annual 1.1% Average household 41.4% couples with
growth rate dependent children
28% couples
without children
11.1% single occupant
Average household size 2.5 Home ownership 78% owned/mortgaged,
22% rented
Average household income $80,072
Source: Location IQ
18 SCA Unlisted Retail Fund 2 Product Disclosure Statement 19 April 20175. Property Portfolio
Anchor Tenant Profile Rent reviews
The base rent is reviewed every 5 years from the lease
Description of tenant – Woolworths Limited commencement date. If turnover rent has been paid in
Woolworths Limited businesses will occupy 94% of any of the three years preceding a review, the base rent
the Property Portfolio GLA and contribute 94% of the will increase by an amount equal to the average of the
Property Portfolio fully leased gross rental income during turnover rent paid in each of those three years.
the Forecast Period.
Additionally, under the Katoomba Woolworths supermarket
Founded in 1924, Woolworths Limited is one of Australia’s and BIG W lease, the base rent is to increase by a minimum
largest retailers measured by sales revenue and number of 5% of the commencing rent or the previous minimum rent
of stores. Total sales revenue in the 2016 financial year (as the case may be) on each of the three five-yearly reviews
was over $58 billion with a net profit before interest and beginning 10 April 2019.
tax of over $2.5 billion.
The Woolworths Limited leases contain four options to renew,
Woolworths Limited is Australia’s largest food and grocery each being for ten years.
retailer operating 996 supermarkets across Australia at the
end of the 2016 financial year. Assignment
The Woolworths supermarket stores are generally large Woolworths Limited can only assign its interest in its leases
supermarkets offering a wide range of products including with the landlord’s consent. The landlord may only withhold
fresh produce, dairy, delicatessen, meat, groceries, bakery, consent if Woolworths Limited is in substantial breach under
health and beauty products, frozen foods and some the lease or if the proposed tenant fails to prove to the
general merchandise. reasonable satisfaction of the landlord that it is a respectable,
responsible and solvent person capable of adequately
BIG W, Woolworths Limited’s discount department store,
carrying on the permitted use in the premises, with the
operates 186 stores across Australia as at June 2016.
financial capacity to meet ongoing operational and associated
BIG W offers a variety of clothing, health and beauty, small
costs of the business.
appliance and other home and family items in store and
through its website. Importantly, Woolworths Limited can only assign to a
tenant with the potential to achieve similar sales turnover
Dan Murphy’s is Australia’s largest liquor retailer offering a
to Woolworths Limited. Subject to satisfying these hurdles,
wide range of liquor products, including cellar release wines
from the date of assignment, Woolworths Limited is released
and directly imported wines and liquor products from around
from all future obligations.
the world. The stores offer a “Lowest Price Guarantee”.
Damage and destruction
Woolworths Limited leases – summary
Where the property is damaged or destroyed, the landlord
Base rent and turnover rent is obliged to reinstate the property except where the damage
Woolworths Limited is the anchor tenant in both properties occurs during the last 5 years of the term of the lease and
and pays base rent monthly in advance. Woolworths does not agree to exercise the next option for
a further term.
In addition to the base rent, and subject to store performance,
turnover rent is payable annually in arrears where the turnover Amenities
rent percentage amount for a year exceeds the sum of the
base rent, tenant’s contribution to increases in outgoings The leases place restrictions on the landlord taking certain
and tenant’s contribution to minimum services charges for actions (primarily alteration or redevelopment) which affect
that year. the amenity enjoyed by Woolworths Limited as tenant.
Woolworths Limited has a right to terminate the lease in
No turnover rent is expected during the term of SURF 2 circumstances where property access is lost or impaired.
and forecast distributions are exclusive of any turnover
rent component. Maintenance of building
Woolworths Limited is responsible for maintaining the
interior of the building, including any landlord’s property.
The landlord is responsible for replacing capital items,
such as air conditioning plant, when necessary, regardless
of the original ownership of the items.
195. Property Portfolio
Restrictions on sale/right of first refusal Rental guarantee – shops T6 and T9
If the landlord intends to sell the Katoomba property, the The tenant of Shop T9, Blockbuster Video, will be vacating its
landlord is required to first offer the property to Woolworths premises upon expiry of its lease in June 2017. The tenant of
Limited. Woolworths Limited has 45 Business Days within Shop T6, Blooms the Chemist, has agreed to relocate to the
which to exercise its right to purchase the Katoomba property T9 premises. For further details see the Agreement for Lease
on the terms and conditions proposed by the landlord. table in Section 5.
If Woolworths Limited does not exercise its right to purchase, This means that during the first year of the Fund:
the landlord must again offer the property to Woolworths
(a) Shop T6 will be vacated; and
Limited if the landlord proposes to sell the property to another
person for a lower price, or on more favourable terms and (b) Shop T9 will be fitted out to accommodate the
conditions, than originally offered to Woolworths Limited. relocating pharmacy, Blooms the Chemist.
Woolworths Limited has a period of 15 Business Days
SCA Property Group will provide a rental guarantee to
in which to accept a subsequent offer and if it fails to do
SURF 2 during the Forecast Period, capped at $200,000
so, the property is free from any further sale restrictions.
to cover:
(a) rental shortfall for Shop T6 (at $55,000 per annum,
Specialty tenants with 4% annual increases) pending its reletting
to a suitable tenant;
Specialty tenants at Mittagong Shopping Village occupy
their premises under a common form of lease, with remaining (b) fitout allowance for Shop T6; and
lease terms ranging from a few months (Pharmacy) to seven
(c) rental shortfall for Shop T9 (at $99,750 per annum, with
years. The leases have annual rental review mechanisms.
4% annual increases) pending the premises being fitted
The Property Portfolio has five speciality tenants which out to accommodate the new Blooms the Chemist
contribute 6% of the Property Portfolio fully leased gross premises, until lease commencement.
income during the Forecast Period. Four specialty tenants
have expiries during the term of the Fund. There is an executed
Agreement for Lease for the Mittagong property, involving the
relocation of Blooms the Chemist to the vacating Blockbuster
tenancy, the handover date is 1 July 2017.
The independent valuation indicates that the rental profile
of Mittagong Shopping Village is such that it lies generally
below a basket of comparable centres and the current rentals
would appear to be sustainable in the short to medium term.
20 SCA Unlisted Retail Fund 2 Product Disclosure Statement 19 April 20176.
Fund Structure
Big W Katoomba – Main entrance and Policies
216. Fund Structure and Policies
6.1 The Offer 6.2 Investment objective
SURF RE is seeking to raise the Total Offer Amount of SURF 2 aims to provide Investors with sustainable and
$29.5 million. The Offer opens on the date of this PDS and stable income and the potential for capital growth through
will close for investment on the earlier of the date of the Total the investment in a Property Portfolio located in regional
Offer Amount being received and 5:00pm on 19 May 2017. New South Wales.
SURF 2 is a closed end fund and will have a 5 year term To achieve the investment objective, SURF RE will:
ending on the 5th anniversary of the Closing Date. The term
(a) invest in Katoomba Marketplace and Mittagong
of SURF 2 may extend if a Special Resolution is passed
Shopping Village;
by Investors.
(b) actively manage the Property Portfolio to ensure that
SURF RE may vary the Closing Date or close or suspend
its progress and performance are consistent with the
the Offer from time to time for any reason. The Issue Price
investment objective of SURF 2; and
of Units as at the date of this PDS is $1.00 and forecast net
tangible assets (NTA) per Unit as at the Closing Date is $0.96 (c) where appropriate, sell a property or the Property
per unit. Portfolio to maximise returns to Investors.
If the total offer amount is not achieved 6.3 Term of SURF 2
If the Total Offer Amount is not achieved by 30 June 2017, all
amounts received will be refunded. No interest will be paid SURF 2 will have a 5 year term ending on the 5th anniversary
on the amounts received. of the Closing Date.
Prior to the end of the 5th anniversary of the Closing Date,
Minimum application amount per investor SURF RE expects to initiate an orderly sales process of the
Property Portfolio. This sales process may extend beyond
The minimum Application Amount for Investors is $25,000 the term of SURF 2 where SURF RE considers this is in the
and in multiples of $1,000 thereafter. SURF RE may waive the best interests of Investors. For example an orderly sale of the
minimum Application Amount requirements at its discretion. Property Portfolio may take 6 to 18 months beyond the term
SURF RE has the discretion to reject in full, accept lower of SURF 2. Once the debt facility is repaid it is expected that
amounts or scale back any Application for Units made the remaining net sale proceeds will be distributed to Investors.
pursuant to the Offer. Allocation will be on a “first-in” basis. Alternatively, the term of SURF 2 could be extended
if a Special Resolution is passed by Investors.
Total offer amount
SURF RE does not intend to accept additional Applications Early sale of the Property Portfolio
once the Total Offer Amount has been received but retains While it is not the Responsible Entity’s current intention, if
discretion to accept additional Applications having regard SURF RE considers it in the best interests of Investors, it may
to the best interests of all Investors at the relevant time. sell the Property Portfolio prior to the conclusion of SURF 2’s
5 year term. The sale of either one or both properties in the
No cooling off period Property Portfolio prior to the conclusion of SURF 2’s 5 year
term will have an impact on the distribution and capital return
No cooling off rights apply to an Application for Units.
of SURF 2. The decision to sell either one or both properties
This means that you cannot withdraw your Application
prior to the conclusion of SURF 2’s 5 year term will include
Form or payment once it has been lodged.
consideration of its impact on the total return of SURF 2
to Investors.
In accordance with the right of first refusal in the Katoomba
lease, the Katoomba property will first be offered to
Woolworths Limited which has a right of first refusal
on sale (Section 5 and 15).
22 SCA Unlisted Retail Fund 2 Product Disclosure Statement 19 April 20176. Fund Structure and Policies
6.4 Fund structure
The following diagram shows the ownership structure of SURF 2.
Investors
Responsible
Entity – SURF RE
SURF 2 Debt Facility
Manager –
SCA Operations
Property
Responsible Entity SURF RE has delegated certain powers to the Manager
under the Investment Management Agreement, however,
SCA Unlisted Retail Fund RE Limited (SURF RE) is the retains its powers under the Constitution to:
Responsible Entity of SURF 2 and the issuer of the Units
under this PDS. (i) Accept or reject applications for Units;
The Board of SURF RE comprises 3 directors: (ii) Issue Units; and
(a) 2 independent Directors including an independent (iii) Issue any disclosure document for SURF 2.
chairman; and
(b) 1 Executive Director being the Chief Executive Officer Unit pricing
of SCA Property Group1 The Unit Price at the Closing Date will be $1.00. The initial
Further information regarding the Board of SURF RE and NTA per Unit is forecast to be $0.96. Refer to section 11 for
the key management team is set out in sections 7 & 8. more information.
Thereafter, the Unit Price will be calculated on a half-yearly
Manager basis as part of the financial reporting process as at each
reporting date (30 June and 31 December) and will reflect
SURF RE has appointed Shopping Centres Australasia the NAV per Unit and may be adjusted for the capitalisation
Property Operations Pty Limited (ACN 160 890 433) of certain Fund expenses.
(SCA Operations) as the Manager under the Investment
Management Agreement to provide management services Expenses that may be capitalised are all those relating
and resources to SURF RE to assist it in fulfilling its obligations to the Offer including the Establishment Fee and upfront
as the Responsible Entity of SURF 2. borrowing costs.
SURF RE as the Responsible Entity of SURF 2 will pay the
Manager’s fees as specified in the Investment Management
Agreement. A summary of the terms of the Investment
Management Agreement is set out in Section 15.
1. Anthony Mellowes is the Chief Executive Officer of SCA Property Group. Mark Fleming, the Chief Financial Officer of SCA Property Group, is the Alternate
Director for Anthony Mellowes.
236. Fund Structure and Policies
Valuation policy Upfront borrowing costs have been capitalised and will
be amortised over the term of the debt facility.
SURF RE has a valuation policy which will apply to SURF 2 and
requires that the: These financing arrangements reduce the risk to Investors
as to the level of financing costs for approximately the first
• Property Portfolio is valued every 6 months and is 2 years of SURF 2.
independently valued at least once every 3 years
as at the reporting date (30 June and 31 December)
Gearing ratio
and in line with the requirements of the debt providers;
The gearing ratio indicates the extent to which the SURF 2
• independent valuer engaged by SURF RE will be licensed
Property Portfolio is funded by borrowings. The gearing ratio
to practice as a valuer under Australian Law, is a Certified
gives an indication of the potential risks faced by SURF 2
Practicing Valuer registered with the Australian Property
as a result of its borrowings due to, for example, an increase
Institute (API), has adequate professional indemnity
in interest rates or a decrease in the value of the Property
insurance, possesses a current track record of valuing
Portfolio. A higher gearing ratio means a higher reliance
assets of a similar nature within the same geographic
on external liabilities to fund the Property Portfolio and
region, and does not have a pecuniary interest in the
exposes SURF 2 to increased funding costs if interest
Property Portfolio.
rates rise. A highly geared investment has a lower asset
buffer to rely on in times of financial stress.
Debt finance
ASIC Regulatory Guide 46 requires the gearing ratio to be
Gearing and interest cover policy calculated as:
SURF RE has a target gearing of less than 50% for SURF 2.
Gearing ratio = Total interest bearing liabilities
The gearing of SURF 2 is not static and will move with
movements in the value of the Property Portfolio. Total assets
SURF RE has entered into a debt facility where the maximum
allowable loan-to-value ratio and minimum allowable interest As at Closing Date
cover ratio are expected to provide sufficient headroom to $’000
minimise the likelihood of these covenants being breached. Total interest bearing liabilities 27,034
The debt facility has been provided by a major Australian
Total assets 1
55,300
bank with security granted against the Property Portfolio by
first-ranking mortgages and a security interest over SURF 2’s Gearing ratio 48.9%
Property Portfolio in priority, but with no recourse to Investors.
1. Total Assets as at the Closing Date comprise the Property Portfolio
SURF RE believes the terms of the debt facility and headroom with a value of $55.1 million and $200,000 working capital.
to covenants (refer below) comply with this policy.
Under the debt facility the loan-to-value ratio is calculated
Interest expense of SURF 2 will not be capitalised. on the same basis as above.
The maximum allowable loan-to-value ratio covenant for this
Debt Facility facility is set at 55%. On the Closing Date, the debt facility
A major Australian bank has provided SURF 2 with a debt is expected to be drawn to approximately $27 million.
facility for the purposes of partially funding the acquisition of On this basis, the loan-to-value ratio is forecast to be
the property portfolio. The term of the debt facility is 5 years. 48.9% at the Closing Date, meaning that the value of the
Property Portfolio would need to reduce by approximately
Interest rate risk 10.8% before the loan-to-value ratio debt facility covenant
SURF 2 has entered into an interest rate swap with a face is breached. This translates to the value of the properties
value of $13.6 million to fix financing costs for approximately reducing to approximately $49.1 million.
50% of the debt facility amount for approximately the first
2 years of the 5 year term of SURF 2. Interest cover
The annual total financing costs (including the fixed interest Interest cover measures the ability of SURF 2 to meet its
payable under the interest rate swap) of the debt facility interest payments on debt finance from its earnings. The level
during the Forecast Period is expected to be approximately of interest cover gives an indication of SURF 2’s financial
4% per annum. This is inclusive of a market base rate, fixed health, in paying both interest to debt finance providers and
interest payable under the interest rate swap and bank fees distributions to Investors. It is a key measure of the risks
(including bank margin). The bank margin comprises a line associated with SURF 2’s debt finance and the sustainability
fee and a margin. The line fee is payable on the undrawn of debt refinancing.
amount of the facility and the margin is payable on the
drawn debt balance.
24 SCA Unlisted Retail Fund 2 Product Disclosure Statement 19 April 20176. Fund Structure and Policies
The lower the interest cover ratio, the higher the risk that Distribution policy
SURF 2 will not be able to meet its interest payments.
A fund with a low interest cover ratio only needs a small The first distribution will be for the period from the Closing
reduction in earnings, or a small increase in interest rates Date to 30 June 2017 inclusive. The first distribution will be
or other expenses, to be unable to meet its interest payments. paid on or before 31 July 2017. Thereafter, distributions will
ASIC Regulatory Guide 46 requires the interest cover ratio be payable quarterly in arrears. Distributions will generally
to be calculated as: occur within 1 month of the conclusion of each quarter.
A fund update will also be made available on the SCA
EBITDA – unrealised gains Property Group website each quarter.
Interest cover ratio = + unrealised losses SURF RE intends that distributions will be in line with
and paid out of SURF 2’s cash from operations (excluding
Interest expense
borrowings) available for distribution.
Forecast for the To this end, SURF RE intends, over time, to distribute
period ending the whole of SURF 2’s distributable income calculated
30 June 2018 in accordance with the Constitution. In doing so, a portion
($’000) of distributable income may be retained in one period to
smooth distributions and/or provide additional working
EBIT 3,413
capital for future periods.
Amortisation of borrowing costs 27
Unrealised gains – straight-line (301) Distribution payments
income adjustment All distributions to Australian resident investors will only
be paid directly into an Australian bank account or other
EBITDA 3,139
account with a financial institution (where there is a branch
Interest expense 1,053 in Australia).
Interest cover ratio 2.98 X Distributions to non-resident investors will be paid into a valid
bank account with the Australian dollar distribution converted
Under the debt facility the interest cover ratio is calculated to the investors local currency at a spot exchange rate.
substantially on the same basis as above, except that If valid bank account details are not provided, SURF RE
further adjustments can be made for other non-recurring may delay processing an Applicant’s Application and/or
or non-cash items. an Investor’s distribution payment. Distributions will not
The minimum interest cover ratio is 1.75 times. SURF 2’s be paid by cheque. SURF 2 does not have a distribution
interest cover ratio for the period ending 30 June 2018 reinvestment facility.
is forecast to be 2.98 times, meaning that the forecast
net rental income of the Property Portfolio would need Tax-deferred amounts
to reduce by over 40% before the debt facility interest
cover ratio covenant is breached. SURF RE anticipates that distribution payments to holders of
Units will contain a component of tax-deferred income. The
tax-deferred component arises through the different tax
6.5 Distributions treatment of expenses and depreciation allowances on
buildings and plant and equipment within a building for
Forecast distributions accounting and taxation purposes. For further information on
SURF RE intends to pay distributions quarterly in arrears of the tax implications of investing in SURF 2, refer to
7.0% for the years ending 30 June 2018 and 30 June 2019. Section 14.
SURF RE also intends to pay a distribution in respect of Changes in the amount of depreciation, interest rates, the
the “Stub Period” from the Closing Date until 30 June 2017. level of gearing and other risk factors may influence the
SURF RE makes no representation as to the amount of actual tax-deferred amounts of a distribution.
the Stub Period distribution as it will depend on a number
of factors including the Closing Date which may be earlier
or later than outlined in this PDS.
This forecast rate of distribution and actual distributions
are subject to a number of risks which are summarised
in section 9.
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