STIRLING JUNCTION FAIR SHOPPING CENTRE FUNDStirling is targeting a total return of 12.8% p.a. for investors over a 4 year period, including an average

net cash distribution of 7.8% p.a. Junction Fair Shopping Centre is a dominant neighbourhood shopping centre, anchored by Coles supermarket providing 50% of the Property’s income.

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� Target IRR of 12.8% p.a. and an average net cash distribution yield of 7.8% p.a. over 4 years with a Gross Tax Effective1 return of 17.7% p.a.

� Base case net IRR of 9.6% p.a. and average cash distribution of 8.2% p.a over a 6.5 year period.

� Coles providing approximately 50% of the Centre’s income with a lease to June 2027, plus 2 x 10-year options

� Non-discretionary and service-based tenants comprise 77% of the Centre’s lettable area

� Per capita income of the Primary Trade Area (PTA) is 18% higher than the Sydney Metropolitan average

� Newcastle inner suburbs and CBD is undergoing significant growth and government infrastructure investment leading to gentrification and strong population growth of 1.6 %p.a. in the Centre’s Main Trade Area (MTA)

1 The Gross Tax Effective is the Gross Equivalent Return the Fund generates for an investor on the highest marginal tax rate

� Coles anchored dominant neighbourhood shopping centre which is 99% leased with a 4.8-year WALE (by income)

� Centre generates significant turnover in excess of $60m p.a.

� Property has a site area of 11,250 sqm with 4 street frontages comprising 7,226 sqm of lettable area and a permissible Floor Space Ratio of 2:1. Opportunity exists for an additional 15,100 sqm of Gross Building Area

� 231 onsite car spaces with 202 basement and 29 on-grade

� Weighted average rental reviews of 3.5% p.a., for the non-Coles tenants

� Surrounded by affluent and well-established suburbs of Merewether Beach, Merewether Heights, Bar Beach and Cooks Hill, which all continue to densify

� Located 2 kms south of Newcastle CBD with adjoining public transport (buses) providing connecting services to train and light rail

Key Features Property Highlights

PROPERTY

LINGARD HOSPITAL EXPANSION

NEWCASTLE CBD

THE JUNCTION PUBLIC SCHOOL

LINGARD PRIVATE HOSPITAL

ST JOSEPHS PRIMARY SCHOOL

Overall, Junction Fair provides a Coles supermarket anchored shopping centre with a strong retail mix that has been significantly refreshed in recent years. The shopping centre presents strongly and has a number of iconic Newcastle brands that add to the destinational appeal.LOCATION IQ

Newcastle is a diversified City that has successfully transformed from a commodities-based exporter to a health and education dominated economy which employs 27% of the workforce.

� Recent government infrastructure investment of $650 million in major projects include:

— $310 million on light rail transport

— $147 million upgrade to Newcastle airport connecting it to New Zealand, Asia and America

— $95 million on University of Newcastle CBD campus

— “Revitalising Newcastle” is a NSW Government program focused on activating the City to attract people, jobs and tourism to Newcastle

� World class health and education sectors with:

— John Hunter Hospital annually serving 370,000 patients and 2,705 staff, with major expansion planned

— The University of Newcastle has 26,600 students and 1,700 staff

� The Primary Trade Area (PTA) sector population is large at 21,530 persons

� Across the PTA, the supply of supermarket floorspace is 27% below the Australian benchmark, translating to less competition

� The Coles supermarket is the only full line supermarket within the PTA

� PTA average per capita income of $49,568 p.a. is 18% greater than the Sydney Metropolitan average

� Large sections of the PTA demonstrate average household income in excess of $140,000 p.a. (refer below)

� The Main Trade Area (MTA) population is 41,500. It is projected to increase at an average annual growth rate of 1.6% p.a. to 2031, exceeding the Metropolitan Sydney average by 14% p.a. over the same period

Revitalised Economy of Newcastle

Strong Property Fundamentals

AVERAGE HOUSEHOLD INCOME LEVELS, 2016 CENSUS

Source: Location IQ Trade Area Analysis Report from 2016 Census

TARGET RETURN STRATEGY

The Report by retail consultant, Location IQ, has identified the following retail categories where the centre is underrepresented:

� medical services

� broader takeaway food

� retail services that complements the high household income of the PTA

presenting an opportunity for Stirling to undertake a repositioning strategy for Junction Fair that aims to widen the Centre’s retail offering and deliver an enhanced IRR over the base case.

This Strategy is contingent upon achieving a successful commercial outcome in restructuring the Coles lease and lettable area, which Location IQ has identified is greater than the average lettable area for full-line supermarkets.

The Manager is Targeting a net IRR of 12.8% p.a. with a Gross Tax Effective return of 17.7% p.a.

BASE CASE SCENARIO

Stirling’s base case scenario, forecasting an average cash yield of 8.2% p.a. over the Fund investment term, will involve:

� Review of the tenancy mix and where required remixing tenancies to ensure the Centre’s offering remains attractive to the MTA

� Increase net operating income via realisation of operating cost savings

� A focused marketing strategy targeting the strong affinity the MTA has with local retail amenity

� Actively engage with Coles over the investment period to pursue an extension of the Coles lease via the exercise of the first of Coles’ 2 x 10 year options

producing a forecast IRR of 9.6% p.a. with a Gross Tax Effective return of 12.5% p.a.

Employing Stirling’s extensive retail property expertise over the past 20 years, Stirling has identified the following strategies for the Centre.

Investment Strategy

Stirling Junction Fair Shopping Centre Fund

Disclaimer: This document is issued by Stirling Property Funds Limited (ABN 19 617 836 736 AFSL 497783). Information in this document is accurate as at 28 February 2020. Stirling will act as the Manager of the Fund. Stirling recommends that before a decision is made to invest in the Fund, investors should consult their financial or professional adviser. The information in this document is general information only and does not take into account the objectives, financial situation or particular needs of any person. You need to consider whether this investment is appropriate for you in light of your objectives, financial situation and particular needs. Stirling and its associates will receive fees in relation to an investment in the Fund as disclosed in the IM. Investment in the Fund is subject to risk, including possible delays in payment or loss of income and principal invested. Stirling does not guarantee the performance of the Fund..

INVESTMENT

Effective property purchase price

$46.67 million (supported by Cushman & Wakefield Valuation of $47 million in December 2019)

Investment term 4 years target

6.5 years base case (est.)

Investment minimum $250,000 (or unless agreed with the Manager)

Offer amount $27.8 million

Net distribution (average over Term)

8.2% p.a. (paid quarterly)

Commencing 7.9% p.a. (part year 1 and year 2)

IRR 12.8% p.a. (target strategy)

9.6% p.a. (base case scenario)

Financier Commonwealth Bank of Australia (indicative terms received)

Facility Amount $24.5 million

Amount drawn $23 million

Commencing LVR 49%

LVR covenant 60%

Line fee pricing 1.55% p.a.

Director co-investment $1.0 million co-investment by the Directors of Stirling Property Funds Limited

APPLICATION TO INVESTApplications can only be made by completing the Application Form within the Information Memorandum for the Fund.

THE MANAGERStirling comprises a team of business executives with proven experience, at senior levels, in all forms of commercial and residential property, finance and town planning professions. Stirling draws on the combination of funds management skills and success from former Centuria Property Funds, Bankminster and M & G Real Estate executives together with the outstanding residential property development achievements of the Legacy Property team.

CONTACT DETAILS

Stirling Property FundsLevel 45, 19 Martin Place, Sydney

info@stirlingpropertyfunds.com.au

Matthew Hyder 0439 373 010 Matthew Coy 0412 557 224 Scott Girard 0410 528 893 David Govey 0412 475 311

www.stirlingpropertyfunds.com.au

AFSL 497783

Stirling Junction Fair Shopping Centre Fund

The main trade area population is characterised by an Australian born, affluent population who would have a strong affinity with local retail facilities near their homesLOCATION IQ