valuation report - primarysecurities.com.au · gst) with secure leases to westpac and bendigo bank...

Valuation Report

78 Main Street

Greensborough, Victoria 3088 File Ref: 8708456

Opteon Property Group Australia

ABN 78 144 732 589

Ground Floor, 737 Bourke Street, Docklands VIC 3201

P 1300 40 50 60 E [email protected]

F 03 5223 2309 W www.opteonsolutions.com

SOLUTIONS WITH EXCELLENCE

Liability limited by a scheme approved under Professional Standards Legislation

VALUATION REPORT

78 Main Street Greensborough, Victoria 3088

Prepared For Primary Securities Ltd (ABN 96 089 812 635 AFSH 224107)

Report Purpose Freehold Market Valuation subject to existing tenancy agreements

Valuation Date 5 February 2018

Our Reference 8708456

Client Reference Heritage Property Fund

mailto:[email protected]

http://www.opteonsolutions.com/

78 Main Street Greensborough, Victoria 3088 Our Reference: 8708456



Table of Contents 1.0 Executive Summary ................................................................................................................................. 5

1.1 Instructions ..................................................................................................................................................... 5

1.2 Property Details .............................................................................................................................................. 5

1.3 Risk Overview ................................................................................................................................................. 5

1.4 Property Profile & Risk ................................................................................................................................... 6

1.5 SWOT Analysis ................................................................................................................................................ 7

1.6 Compliance Statements.................................................................................................................................. 7

1.7 Specific Conditions of Valuation Report Use and Reliance ............................................................................ 7

1.8 Key Valuation Outputs .................................................................................................................................... 9

1.9 Valuation Details .......................................................................................................................................... 10

2.0 Instructions ............................................................................................................................................11

3.0 Basis of Valuation & Definitions .............................................................................................................11

4.0 Date of Valuation ...................................................................................................................................12

5.0 Location .................................................................................................................................................12

6.0 Tenure ....................................................................................................................................................14

6.1 Title Particulars: ............................................................................................................................................ 14

6.2 Easements, Encumbrances & Other Interests Noted on Title ...................................................................... 14

7.0 Planning .................................................................................................................................................16

8.0 Site .........................................................................................................................................................17

8.1 Site Details .................................................................................................................................................... 17

8.2 Services ......................................................................................................................................................... 17

9.0 Improvements ........................................................................................................................................18

9.1 78 Main Street .............................................................................................................................................. 18

9.2 Plant & Equipment ....................................................................................................................................... 21

9.3 Building Areas ............................................................................................................................................... 22

9.4 Condition and Repairs .................................................................................................................................. 22

10.0 Environmental Issues .............................................................................................................................23

10.1 Environmental Hazards ................................................................................................................................ 23

10.2 Contamination Questionnaire ...................................................................................................................... 23

10.3 Contamination Commentary ........................................................................................................................ 24

10.4 Asbestos ....................................................................................................................................................... 24

11.0 Occupancy and Lease Details..................................................................................................................25

11.1 Lease Summary............................................................................................................................................. 25

12.0 Statutory Assessments ...........................................................................................................................29

12.1 Outgoings ..................................................................................................................................................... 29

13.0 Market Commentary ..............................................................................................................................30

14.0 Sales History ...........................................................................................................................................31

15.0 Market Evidence ....................................................................................................................................32

15.1 Rental Evidence ............................................................................................................................................ 32

15.2 Sales Evidence .............................................................................................................................................. 34

16.0 Valuation Methodology & Conclusions ..................................................................................................38

16.1 Adopted Valuation Approach ....................................................................................................................... 38

16.2 Income Approach ......................................................................................................................................... 38

16.3 Market Approach.......................................................................................................................................... 40

16.4 Valuation Reconciliation & Conclusion ......................................................................................................... 41




17.0 Goods & Services Tax .............................................................................................................................41

18.0 Estimated Insurance Value .....................................................................................................................42

19.0 Valuation ...............................................................................................................................................43

19.1 Market Value As If Complete - Subject to Existing Leases ............................................................................ 43

20.0 Assumptions, Conditions & Limitations ..................................................................................................44

Appendices

1 Letter of Instruction 2 Title Search Statement 3 Title Search Statement 4 Plan of Subdivision 5 Planning Property Report 6 Contract of Sale




1.0 Executive Summary 1.1 Instructions

Instructing Party Mr David Butterfield, Chairman Primary Securities Ltd as the responsible entity for the Heritage Property Fund

Client / Authorised Party Primary Securities Ltd

Client Reference Heritage Property Fund

Valuation Purpose Freehold Market Valuation subject to existing tenancy agreements

1.2 Property Details

Property Address 78 Main Street, Greensborough, Victoria 3088

Property Description The subject property comprises a modern circa 2016 built, architecturally designed three level mixed use commercial building with additional twenty (20) basement car spaces.

The building currently provides a fully leased net income of $524,915 per annum (plus GST) with secure leases to Westpac and Bendigo Bank on the ground floor with the upper levels of office leased to multiple tenants including Mind Australia (Headspace), Whitehead Financial and Pekada Finance.

Encumbrances Refer section 6.2 for details on encumbrances.

Lettable Area 1,440 square metres

Zoning Activity Centre - Schedule 1

1.3 Risk Overview

Risk

Cashflow Certainty – Are there significant concerns with the ability of the property to sustain the market net income over the next three years?

Response: No

Lettability if Vacant – If vacant or owner occupied does the valuer reasonably believe the property may not be lettable within a six month period at the adopted market rent?

Response: No

Saleability – Are there any attributes of the property which would significantly impact on its ability to be saleable at the assessed value level within a six month marketing period?

Response: No

Market Volatility –Is the market for this asset likely to have an abnormally high degree of volatility?

Response: No




1.4 Property Profile & Risk

Market Low Low – Medium Medium Medium – High High

Marketability Reasonable

Market Activity Tightly held with few transactions of well leased investment properties.

Recent Market Direction Steady, although not without potential for a change in direction.

Market Volatility The market for similar properties in this location in the past has generally demonstrated low market volatility. A note of caution is made noting the property is valued following a prolonged cyclical upswing.

Stock Levels Currently stable stock levels.

Selling Period Estimated 3-4 months, assuming proper marketing and a realistic asking price. The estimated selling period is typical for this type of property in this location

Likely Buyer Profile Likely buyers for the property include private investors and self-managed superannuation funds.

Current Contract Price $9,750,000 on 20 December 2017

Asset Low Low – Medium Medium Medium – High High

Highest & Best Use The highest and best use for the property is considered to be the existing use.

Functionality The property is functional for the existing use.

Specialisation Non-specialised asset with similar properties readily traded in the market.

Capital Expenditure During our inspection we did not note any items requiring immediate capital expenditure, other than items which would normally be undertaken as part of an ongoing regular maintenance program.

Occupancy/Cash Flow Low Low – Medium Medium Medium – High High

Occupancy Status The subject property is currently fully leased to eight (8) various tenants.

WALE 3.46 years

Leasing Demand Leasing demand for the property is currently reasonable.

Letting Period 3-4 months

Foreseeable Factors Likely to Impact on Value 3-5 years

Currently foreseeable factors which may impact specifically on the future value of the subject property include:

Foreseeable declining market conditions;

Possible upward pressure on yields which (all other factors held constant) would have an adverse impact on value;

Increased competition from other developments

Asset Management Low Low – Medium Medium Medium – High High

Asset Complexity The property is a standard asset class.

Current Management The property is currently managed by a property management company on behalf of the owner.

Quality of Management The property currently appears to be appropriately managed.




1.5 SWOT Analysis

Strengths Newly built commercial property allowing for significant tax depreciation benefits.

High profile/exposure to Main Street, Greensborough

Fully leased investment property

Architecturally designed 2016 build with high quality fittings and fixtures

Provision of twenty (20) on-site basement car parks

Proximity to transport infrastructure (Greensborough Train Station 300 metres east)

Weaknesses Non-recoverable land tax;

Part of the property has no direct street frontage

Opportunities Claim depreciation to enhance after-tax performance;

Threats As the improvements are (virtually new) they may depreciate over the short term

Development of competing premises

Downturn in the property market and/or economic climate

Economic factors including interest rates

1.6 Compliance Statements

Conditions Precedent to Issue of Mortgage Funds

The freehold property has been previously recommended by Opteon Property Group, as suitable security for first mortgage purposes subject to the comments and risk profile herein.

Compliance Statement To the best of our knowledge this valuation has been prepared in accordance with applicable valuation standard requirements of “ANZ VG N8” Valuations for use in Offer Documents.

1.7 Specific Conditions of Valuation Report Use and Reliance The Opteon Group (OPG) in the preparation of this valuation report hereby acknowledge that Primary Securities Ltd, in their capacity as the responsible entity for the Heritage Property Fund, and as part of their written instructions as attached herein, have confirmed that they intend to rely upon the valuation report as part of their Product Disclosure Statement (PDS) to their prospective investors and have sought the Opteon Property Group’s consent to such use and reliance by Primary Securities Ltd.

The Opteon Property Group hereby confirms their consent to such use and reliance upon this valuation report specifically by Primary Securities Ltd provided that the following specific conditions are strictly adhered to:

1. The findings, observations and conclusions expressed in this valuation are not to be construed or relied upon as a recommendation to take or not take any particular course or action but instead represent the application of Opteon’s experience and judgement in respect of the facts or matters detailed in the report. Any opinion contained within the report should be read and relied upon in the context of the document as a whole and considered current as at the date of this document.

2. Where the valuation outlines expectations, beliefs, intentions or strategies regarding the future, such forward-looking matters reflect Opteon’s reasonable views and assumptions with respect to such matters but actual results or outcomes could differ materially from those set forth in the valuation due to various factors, including fluctuations in future economic conditions and without limitation, the matters detailed in any assumptions, limitations or qualifications that are discussed in this report. You are warned to make appropriate allowances for contingency in this regard and/or that your investment or financial expectations may not be achieved because of such factors.

3. Otherwise, the valuation is not advice as to taxation, investment or financial strategy nor should the contents be viewed as legal or accounting advice.




4. The report has been prepared without taking into account the particular objectives, financial situation or needs of any individual or entity, so you should not make any use of the Report unless you have sought and relied upon your own independent and expert legal, financial or investment advice.

5. Opteon’s liability on any basis (including negligence) is limited by a scheme approved under Professional Standards Legislation.

6. Prior to releasing or publishing the Report (in whole or part) in connection with any private placement, any financial structuring or public offering of securities or any product disclosure statement or similar (Offering), the Client must:

i. Submit to Opteon, a copy of the draft Offering and/or all summaries or excerpts of the Report which the Client desires to include in (or publish or release in connection with) the Offering, for Opteon’s prior review and consent;

ii. Action any request from Opteon to amend or alter the proposed manner in which the Report (in whole or part), and/or Opteon’s role or position, is, or is intended to be, outlined in the Offering (which for the avoidance of doubt, may comprise the deletion of wording or the inclusion of additional or alternative information or wording); and

iii. Without limiting clause 1.8.6 i.Ensure that any limitations, exclusion or restrictions contained in the Report are prominently and

clearly outlined in the Offering. ii.Ensure that it is prominently and clearly noted in the Offering that Opteon’s liability on any basis

(including negligence) is limited by a scheme approved under Professional Standards Legislation.

Assumptions & Recommendations:

Verifiable Assumptions The instructions and information supplied contain a full disclosure of all information that is relevant

The property will have an equitable allocation of unit entitlement/liability

The “As If Complete” valuation is subject to the following specific assumptions:

Satisfactory completion of the improvements in accordance with the plans, specifications and details;

An inspection by the Valuer following practical completion of the construction and fitout of the Premises by the tenant;

Confirmation or variation of the original valuation figure relevant to the original valuation date following an inspection of the project after practical completion;

Issue of all relevant approvals including a satisfactory building completion certificate /occupancy certificate under the appropriate legislation;

The right to review and if necessary vary the valuation if there are changes in the project design or specification;

Assumptions Requiring Further Consultancy

Nil at present

Recommended Documents to Sight

Registered Plan of Subdivision

Owners' Corporation records

Issue of new Certificates of Title, free of any onerous encumbrances




1.8 Key Valuation Outputs

Passing Net Income $514,421 per annum

Market Net Income $514,421 per annum

Initial Yield 5.28%

Market Yield 5.28%

Market Value Rate $6,771/sqm lettable area




1.9 Valuation Details

Market Value As If Complete:

Market Value subject to Existing Leases upon issue of a separate individual certificate of title and subject to the assumptions detailed throughout this report:

$9,750,000

(Nine Million, Seven Hundred and Fifty Thousand Dollars)

This valuation is exclusive of GST

Interest Valued Fee simple of the Freehold interest subject to existing lease/s and tenancy agreements.

Date of Inspection 5 February 2018

Date of Valuation 5 February 2018

Date Issued 29 March 2018

Currency of Valuation 90 days from the date of valuation, or such earlier date if you become aware of any factors that have any effect on the valuation.

Pecuniary Interest We confirm that the valuer does not have any pecuniary interest that would conflict with the proper valuation of the property.

Signatories

John O'Grady AAPI CPV Head of Department - Commercial API No: 62056 Inspecting Valuer

Scott Chapman AAPI CPV State Director API No: 63463 Counter Signatory

Important This Executive Summary must be read in conjunction with the remainder of this report. The Executive Summary is only a synopsis designed to provide a brief overview and must not be acted upon in isolation to the contents of the valuation report.

Counter Signatory The counter signatory has reviewed the valuation report and working papers in the capacity of Supervising Member and is satisfied that there is a reasonable basis for the valuation opinion. The counter signatory confirms that the report is genuine and is endorsed by Opteon Property Group Australia. The counter signatory did inspect the subject property and may not have inspected comparable evidence. The opinion of value has been arrived at by the Valuer who undertook the inspection and prepared the valuation calculations.

Third Party Disclaimer This report has been prepared for the private and confidential use of our client, Primary Securities Ltd for the specified purpose. It should not be reproduced in whole or part without the express written authority of Opteon Property Group Australia or relied upon by any other party for any purpose and the valuer shall not have any liability to any party who does so. Our warning is registered here, that any party, other than those specifically named in this paragraph should obtain their own valuation before acting in any way in respect of the subject property.

Digital Copies of Reports Where a report has been provided in digital copy and has not been received directly via our firm, the report contents, especially the valuations and critical assumptions, should be verified by contacting the issuing office to ensure the contents are bona fide. In particular if the reader of this report has suspicions that the report appears to be tampered or altered then we recommend the reader contact the issuing office.

Reliance on Whole Report This valuation should be read in its entirety, inclusive of any summary and annexures. The valuer and valuation firm does not accept any responsibility where part of this report has been relied upon without reference to the full context of the valuation report.




2.0 Instructions Instructions have been received to undertake a valuation of the property as per the details below.

Instructing Party Mr David Butterfield – Chairman Primary Securities Ltd

Property Address 78 Main Street, Greensborough, Victoria 3088

Instructions Written Instructions

Client / Authorised Party Primary Securities Ltd

Valuation Purpose Freehold Market Valuation subject to existing tenancy agreements

Specific Instructions Assessment of the Current Market Value of the property as at the Date of Valuation.

Documentation Provided Information we have been provided with and relied upon in undertaking our valuation includes:

Contract of Sale

Lease Documentation

Title Search and Plan of Subdivision

Scope of Work The scope of work undertaken by the valuer in completing the valuation has included:

Collation of information from relevant parties regarding the subject property;

Undertaking our own research regarding the subject property;

An inspection of the property and measurement of buildings where required;

Undertaking market research of similar properties;

Preparation of valuation calculations; and

Preparation of this report.

Compliance Our valuation has been prepared with reference to the Australian Property Institute Practice Standards and Guidance Notes including “ANZ VG N*” Valuation for use in Offer Documents.

A copy of our instructions is attached to this report.

3.0 Basis of Valuation & Definitions This valuation has been prepared in accordance with definitions and Valuation Applications of the International Valuation Standards Council (IVSC) and endorsed by the Australian Property Institute.

Market Value The estimated amount for which an asset or liability should exchange on the valuation date between a willing buyer and a willing seller in an arm’s length transaction, after proper marketing and where the parties had each acted knowledgeably, prudently and without compulsion.

Market Rent The estimated amount for which an interest in real property should be leased on the valuation date between a willing lessor and a willing lessee on appropriate lease terms in an arm’s length transaction, after proper marketing and where the parties had each acted knowledgeably, prudently and without compulsion.




4.0 Date of Valuation Valuation Date 5 February 2018



5.0 Location Location The suburb of Greensborough is generally well regarded and situated approximately 18

radial kilometres north east of Melbourne’s CBD. Greensborough provides a variety of local retail facilities including the major shopping precinct of Greensborough Plaza. Greensborough is well serviced by recreational and educational facilities including NMIT as well as public transport services including the Greensborough Train Station. Greensborough is governed by the City of Banyule and the Shire of Nillumbik. Greensborough is the major commercial, retail and transport centre in Melbourne's outer north-east, servicing a large catchment area. The suburb's main retail area is concentrated around the railway station and includes the Greensborough Plaza Shopping Centre. It is an affluent area with one-third of households reporting income in the upper quartile.

Neighbourhood The subject property is situated in the Greensborough Retail precinct on Main Street. Located within a strong commercial location, the subject property occupies a prime position between the WaterMarc Leisure & Aquatic Centre, Banyule Council Offices and Greensborough Plaza. The property is located within close proximity (within 100 metres to the north west) to a major regional shopping centre known as the Greensborough Plaza. In total the Plaza boast 160 tenants, notably "Kmart", "Coles", "Hoyts", "Australia Post" and "Commonwealth Bank". Main Street provides a quality mixture of local, national and international retail tenants, banks, food and beverage and service industries and is located 17 kilometres to the north east of the Melbourne Central Business District. The property is well serviced by public transport rail and bus services. Located 300 metres to the east is Greensborough train station. In the surrounding streets there are significant residential catchments with dwellings of varying construction and designs

Access The subject is located on the eastern side of the road, with a wide frontage, and has good access to a sealed road with constructed kerbs, gutters and foot paths.

Parking Street car parking is available on Main Street but is limited, whilst there is a council carpark at the rear with 450 spaces. The subject also has 20 internal basement car parks for staff.

Transport & Infrastructure The property has good access to major arterial roads including Metropolitan Ring Road (M80) and Diamond Creek Road. Public transport rail and bus services are available within the immediate vicinity of the subject property. Greensborough train station is located 300 metres east of the subject property.




Location Map

Sourced from Google Maps - www.google.com

Specific Location Map

Sourced from Google Maps - www.google.com




6.0 Tenure 6.1 Title Particulars: The subject valuation land is described as Lot S2 on in preliminary proposed plan of subdivision PS813236M, referred to in the contract of sale, and a copy of which has been provided to us is appended to this report. Our valuation has been assessed assuming a new and separate certificate of title will be issued for the subject valuation land, free of any onerous encumbrances and restrictions. We reserve the right to review our valuation upon sighting a new certificate of title.

Copies of title searches representing the existing title details are, appended to this report and, summarised as follows.

Title Reference Tenure Registered Proprietor Title Area

Lot 1 Plan 713737V Volume 11482 Folio 68

Freehold Tenants in common:

As to 1 of a total of 2 equal undivided shares Sole Proprietor: Greenwalk Holdings Pty Ltd

As to 1 of a total of 2 equal undivided shares Sole Proprietor:Greenwalk Developments Pty Ltd

Strata

Lot A Plan 713737V Volume 11482 Folio 69

Freehold Banyule City Council Strata

6.2 Easements, Encumbrances & Other Interests Noted on Title

Encumbrances The Title refers to any encumbrances created by Section 98 of the Transfer of Land Act 1958 or Section 24 of the Subdivision Act 1988 and any other encumbrances shown or entered on the plan. A review of the plan shows

Volume 11482 Folio 68:

Mortgage AM273851V registered 22 October 2015 in favour of Commonwealth Bank of Australia

Volume 11482 Folio 68 is subject to the following easements:

E-3 - which is an overhanging eave

E-1 - right of way

E-2 - easement of support

E-5 - right of way

E-6 - right of way and drainage



E-9 - right of way and supply of electricity through underground cable

E-10 - right of way and drainage and supply of electricity through underground cable


E-12 - right of way and drainage, underground powerline and supply of water through underground pipes

E-13 - right of way and supply of water through underground pipes and underground powerline

E-14 - right of way and underground powerline and supply of water through underground pipes

E-15 - drainage

E-16 - underground powerline and supply of water through underground pipes

E-17 - right of way drainage and supply of electricity through underground cable

E-18 - right of way


E-24 - supply of electricity through underground cable

E-32 - right of way and drainage and supply of electricity through underground cable




Volume 11482 Folio 69 is subject to the following easements:

E-3 - which is an overhanging eave

E-1 - right of way

E-2 - easement of support

E-5 - right of way

E-6 - right of way and drainage.

Proposed Plan of Subdivision

We are aware that the property is currently in the process of being strata titled with council and the plans are currently proposed. The title (to be issued) is expected to refer to any encumbrances created by Section 98 of the Transfer of Land Act 1958 or Section 24 of the Subdivision Act 1988 and any other encumbrances shown or entered on the plan. Whilst we have not sighted the proposed plan we assume that the land will be free from encumbrances. We also assume that the property has an equitable allocation of unit entitlement. We reserve the right to review our valuation upon sighting a copy of the proposed Plan of Subdivision.

New Title Our valuation has been assessed assuming a new / separate Certificates of Title will be issued for the property, free of any onerous encumbrances and restrictions. Reliance should not be placed on this valuation report until title is issued. We reserve the right to review our valuation upon sighting a copy of the new Title Search Statement.




7.0 Planning Local Government Area Banyule City Council

Planning Scheme Banyule Planning Scheme

Current Zoning Activity Centre - Schedule 1

Overlays Parking Overlay - Precinct 1 Schedule (PO1)

Part Aboriginal Heritage Cultural Sensitivity Overlay.

Existing Use Office & Retail

Permitted Uses A copy of the table of land uses taken from the planning scheme is attached to this report.

Zoning Effect The existing use is a permitted use under the current zoning.

Heritage Issues Not applicable

Zoning Comment The subject property is within, or is affected by, one or more areas of cultural heritage sensitivity as described in the Aboriginal Heritage Regulations 2007. The data provides indicative information about the location and extent of areas of Aboriginal cultural heritage sensitivity and is provided to assist with the decisions about the potential need to prepare a Cultural Heritage Management Plan in relation to proposed activities on this property. The Victorian Aboriginal Heritage Register is not a publicly accessible register because it contains culturally sensitive information; therefore we have not researched this matter further. This report and valuation has been prepared on the basis the extent of the cultural impact does not critically affect the highest and best use of the subject property and the saleability of the asset The subject property is situated within the Greensborough Structure Plan. Greensborough has been identified by the State Government as a Principle activity Centre in its Melbourne 2030 strategy. The Greensborough Principle Activity Centre will be a central activities district characterised by growth in retail and commercial space, aspiring to provide for a large catchment area covering several suburbs and attracting activities that meet metropolitan needs. The Greensborough Structure Plan provides for a detailed strategy into the 're-vamping' of the town centre, principally centred along the Main Street activity strip. The structure plan has been developed to revolve around the following 7 key principles: - Sustainability - Innovative urban design - Ease of movement and connectivity - Greener Greensborough - The Public Realm - An integrated Centre




8.0 Site 8.1 Site Details

Site Description The site comprises an irregular shaped internal allotment that is generally level throughout. The site has an excellent profile to passing pedestrian and vehicular traffic on Main Street.

Street Frontage/Depth Irregular

Dimensions The shape and dimensions of the property are shown on the Title plan.

Source of Site Area The site area has been obtained from the Title Plans.

Site Area Parent Title

Identification The property has been identified by reference to Title search statement and Plan of Subdivision.

8.2 Services

Services Electricity, town water, sewerage, gas, and telephone services are connected.




9.0 Improvements 9.1 78 Main Street

Front

Ground floor retail

Ground floor retail

Office suite

Office suite

Office suite




Office suite

Office suite

Office suite

Office suite

Rear parking

Basement parking




Basement parking

Rear

Main Building Type Commercial building

Style Three-storey, architecturally designed

Accommodation The subject property comprises a modern circa 2016 built, architecturally designed three level mixed use commercial building with additional twenty (20) basement car spaces. The ground floor retail benefits from frontage to Main Street and Greensborough Walk. The upper levels of office benefit from excellent natural light to three sides. Each office suite comprises open plan space with partitioned offices and kitchen/amenities. Ground Floor - Shop 1 (Westpac Bank) 290 sqm Shop 2 & 3 (Bendigo Bank) 170 sqm Level 1 - Suites 1 & 2 (Whitehead Financial) 160 sqm Suites 3, 4 & 5 (Mind Aust) 350 sqm Level 2 - Suite 1 (Red IT) 76 sqm Suite 2 (New Age Insurance Brokers) 105 sqm Suite 3 (GDM Group) 70 sqm Suite 4 & 5 (Pekada Finance) 219 sqm




Construction:

Floors Concrete slab (suspended)

Main External Walls Concrete panels, glass and alucobond (or similar) cladding

Windows Aluminium

Roof Assumed metal deck

Main Interior Linings Plasterboard

Ceilings Modern suspended ceiling tiles on metal grid frame, plasterboard

Construction Year Year built 2016

Building Services

Lighting Fluorescent lighting to office component

Air-conditioning / Ventilation

The building is fully air-conditioned via ceiling ducting from air-conditioning plant and equipment located on the roof.

Lifts The property has a central core which provides lift access for pedestrian movement between all levels.

Electrical The building has standard electrical services.

Fire Services Basic firefighting equipment is provided including fire extinguishers, fire hose reels and emergency exit signs and exits.

Security Systems A building security alarm system is installed, incorporating, video surveillance, electronic key/card access, and alarms.

Disability Access Level or ramp access is provided for disabled persons.

Building Services Comment The building appears to provide a good standard of building services.

9.2 Plant & Equipment Included within our valuation is all plant and equipment (such as air-conditioning plant and equipment, fire services, or the like) which forms an integral part of the property. Our valuation excludes all non-integral plant and equipment, fit-out, furniture and equipment and personal items/contents.




9.3 Building Areas

Total Lettable Area 1,440 square metres

Building Area Measurement Basis

IPMS 3 – Office (Net Lettable Area) Gross Lettable Area (Retail)

Source of Areas The building areas have been calculated from building plans of the property, together with check measurements taken on site.

Accommodation: Measurement Basis: Lettable Area:

Ground Floor – Shop 1 Gross Lettable Area (Retail) 290 sqm

Ground Floor - Shop 2 & 3 Gross Lettable Area (Retail) 170 sqm

First Floor - Suites 1 & 2 Net Lettable Area 160 sqm

First Floor - Suites 3, 4 & 5 Net Lettable Area 350 sqm

Second Floor - Suite 1 Net Lettable Area 76 sqm



Second Floor - Suite 4 & 5 Net Lettable Area 219 sqm

Total Lettable Area: 1,440 sqm

It would be best practise to complete a survey following practical completion and fitout to ensure the most accurate measurements.

Tenancy Configuration The above areas have been calculated based on the current building configuration. If the premises are occupied by multiple occupants or tenancy boundaries are varied, the lettable areas may vary due to the inclusion or exclusion of common areas.

9.4 Condition and Repairs

Internal Condition Generally appears in good condition

External Condition Generally appears in good condition

Repairs & Maintenance At the time of inspection the building appeared to be in reasonable condition with no significant requirements for repairs being noted other than items which would normally be undertaken as part of regular repairs and maintenance.

Essential Health & Safety Annual maintenance certificate not sighted

Pest Infestation Our inspection of the subject property did not reveal any visible signs of pest infestation. It is recommended that regular inspections (and chemical treatments if necessary) are undertaken by a suitably certified pest control firm to ensure the property remains free of any pests.




10.0 Environmental Issues 10.1 Environmental Hazards

Flooding/Inundation The site appears to have reasonable site run-off drainage and does not appear to be subject to flooding during normal climatic conditions.

Landslip The property is not within a publicly known landslip area however this could be confirmed by obtaining copies of relevant searches from the Council and other authorities should this be considered necessary.

Subsidence The property is not within an area which is publicly known to be subject to subsidence however this could be confirmed by enquiries from the Council and other authorities should this be considered necessary.

10.2 Contamination Questionnaire

Question Response

Historical Use

1. Is there any indication that there has been previous noxious or potentially contaminating use of the property?

No

Planning Controls

2. Is the property subject to an environmental planning overlay that could constrain land use and development, or an overlay that indicates the need for an environmental audit as part of any development approval process?

No

Adjoining Planning Controls

3. Is land adjoining the property the subject of an overlay that indicates adjoining land could be contaminated?

No

Neighbouring Land Use

4. Based on a visual inspection to the extent that it is reasonably possible to do so, are there adjoining sites that appear to or are known to have or have had noxious or potentially contaminating uses?

No

Current Operations at the Property

5. Have your investigations identified industrial processes onsite that involve the use of chemicals or hazardous materials?

No

6. Have your investigations identified there having been, past or present, the underground storage of fuels, chemicals or hazardous materials at the Property?

No

Registers, Notices and Orders

7. Is the property included in the current register of contaminated sites, or the subject of a contaminated land audit as indicated on that public register?

No

Environmental Licensing

8. Are the operations at the premises subject to an environmental license, resource consent or equivalent?

No

Asbestos

9a Could any buildings or improvements at the property predate 1990? No

9b Is asbestos containing material known to be present at the Property? Unknown

10. Were there any observed non-compliances with statutory requirements pertaining to asbestos or hazardous materials (e.g. failure to maintain current asbestos register / record?)

Unknown




11. Did the asbestos register / record indicate the presence of asbestos? Unknown

12. Is an Asbestos Management Plan in place for the Property? Unknown

10.3 Contamination Commentary

Current Use Office

Past Use Unknown

Site Contamination Based on our site observations, current and past uses along with surrounding uses, contamination of the site is considered unlikely.

API List of Potentially Contaminating Activities

The current and past uses are not listed on the API List of Potentially Contaminating Activities, Industries and Land Uses.

Contaminated Sites Register

The subject property is not listed on the Contaminated Sites Register.

Environmental Audit We have not been provided with an environmental audit, nor are we aware of the property being affected by soil contamination. We have not investigated the site beneath the surface or undertaken vegetation or soil sampling.

Contamination Assumption Our valuation has been based upon the assumption that there are no actual or potential contamination issues affecting the property.

10.4 Asbestos

Asbestos Register We have been advised the property was constructed in circa 2016. Assuming a compliance with current building regulations it is highly unlikely that asbestos containing materials are present in the building.

Inspection Observations As there were only limited commercial building products with asbestos content available for sale from 1986, the likelihood of any being installed in the subject property is remote. However, should a survey detect installed asbestos products we reserve the right to review this valuation.




11.0 Occupancy and Lease Details Occupancy Status The subject property is currently fully leased to eight (8) various tenants with a WALE of

3.46 years.

Leases Sighted We confirm having been provided with signed copies of the relevant Leases.

11.1 Lease Summary

Lessee Westpac Bank Corporation

Demised Premises Part of the Land being, Westpac Greensborough Retail 4 and Retail 5, Greensborough Walk (also known as Shop 1, Ground Level)

Commencement Date 23 March 2016

Initial Term 7 yrs

Options 5+5 yrs

Expiry Date 22 March 2023

Commencing Rent $142,000 pa

Current Rent $146,260 pa – as at 24 March 2017

Rent Reviews The rent is increased annually by 3%. The rent is reviewed to market at the commencement of the option(s).

Net or Gross Net

Outgoings Tenant pays it proportion of outgoings (aside from land tax), being 6.5% of the building outgoings.

Permitted Use Any use permitted by law

Special Conditions No Guarantor and no Security Deposit – Westpac is a listed corporation and will not be subject to provisions of Retail Leases Act 2003

Lessee Bendigo and Adelaide Bank Limited

Demised Premises Part of the Property, being shops 6 & 7, Ground Level, 78 Main Street and three (3) car parking spaces (also known as Shop 2 & 3)


Initial Term 5 yrs

Options 5+5 yrs

Expiry Date 28 February 2021




Net or Gross Net

Outgoings Tenant pays its proportion of outgoings (aside from land tax), being 6.5% of the building outgoings

Permitted Use Any retail use permissible by law - banking and associated financial services

Special Conditions No Guarantor and no Security Deposit – Bendigo Bank is a listed corporation and will not be subject to provisions of Retail Leases Act 2003




Lessee Whitehead Financial Pty Ltd

Demised Premises Suites 1 & 2, Level 1, 78 Main Street, Greensborough.

Commencement Date 5 July 2017

Initial Term 2 yrs & 6 months

Options 2+2 yrs

Expiry Date 4 January 2020


Current Rent $56,000 pa


Net or Gross Net


Permitted Use Office

Special Conditions Lease is a retail lease and is subject to provisions Retail Leases Act. All outgoings (aside from land tax) are payable by the Tenant

Lessee Mind Australia

Demised Premises Suites 3, 4 & 5, Level 1, 78 Main Street Greensborough



Options 3+3 yrs

Expiry Date 20 June 2019




Net or Gross Net


Permitted Use Commercial office and the provision of counselling and related services

Special Conditions Lease is a retail lease and is subject to provisions Retail Leases Act.




Lessee Michael Christopher Brazis (trading as Red IT Solutions)

Demised Premises Part of the Land and the Building and Known as Suite 6 (also known as Suite 1, Level 2, 78 Main Street Greensborough)

Commencement Date 19 December 2016


Options 3 yrs

Expiry Date 18 May 2020


Current Rent $27,945 pa – as at 20 December 2017

Rent Reviews The rent is increased annually by 3.5%. The rent is reviewed to market at the commencement of the option(s).

Net or Gross Net

Outgoings Tenant pays its proportion of outgoings (aside from land tax), being 3% of the building outgoings



Lessee New Age Insurance Brokers Pty Ltd

Demised Premises Suite 2, Level 2, 78 Main Street, Greensborough

Commencement Date 17 November 2017

Initial Term 5 yrs

Options 3+3 yrs

Expiry Date 16 November 2022




Net or Gross Net


Permitted Use Offices





Lessee GDM Group Pty Ltd

Demised Premises Suite 3, Level 2, 78 Main Street, Greensborough

Commencement Date 17 November 2017

Initial Term 5 yrs

Options 5 yrs

Expiry Date 16 November 2022




Net or Gross Net




Lessee Pekada Finance

Demised Premises Suites 4 & 5, Level 2, 78 Main Street, Greensborough


Initial Term 6 yrs

Options 3 yrs

Expiry Date 30 March 2022




Net or Gross Net


Permitted Use Offices





12.0 Statutory Assessments Statutory Assessments We have requested a rates and land tax assessment notice but haven’t sighted any

documents. We have applied a non-recoverable rate of $10,500 per annum for valuation purposes.

12.1 Outgoings From information provided and market benchmarks, we have determined outgoings for the property as follows:

Outgoings Analysis

Outgoings We have been provided with a 2017-2018 Outgoings Budget. The outgoings (excluding non-recoverable owner outgoings) equate to approximately $118.81 psm ($171,080 per annum), which appear within an appropriate range in comparison to other commercial buildings.

Non-Recoverable Outgoings

For the purpose of this valuation, we have adopted the proposed non-recoverable owner outgoings of approximately $10,500 pa.

Outgoings Assumption This valuation assumes the financial information provided to us is reasonably accurate.

Outgoings Schedule

$ psm:

Statutory Outgoings: Land Tax $10,500 $7.29

Council Rates $42,580 $29.57

Water & Sewerage Rates $19,000 $13.19

Estimate/Other $0 $0.00

$72,080 $50.06

Operating Expenses: Air Conditioning $0 $0.00

Cleaning (Common Area) $48,500 $33.68

Electricity (Common Area & Services) $11,000 $7.64

Fire Protection $2,000 $1.39

General Repairs $8,500 $5.90

Insurance $8,000 $5.56

Lift Maintenance $9,000 $6.25

Management Fees @ 0.0% $0 $0.00

Miscellaneous $0 $0.00

Structural R&M $0 $0.00

Security $4,000 $2.78

Estimate/Other $18,500 $12.85

$109,500 $76.04

Total Outgoings: $181,580 $126.10

Apportioned: Recovered Outgoings $171,080 $118.81

Non-Recovered Outgoings $10,500 $7.29




13.0 Market Commentary Investor sentiment is still seemingly strong for good quality assets in Melbourne’s suburban commercial market, driven by a stable tenant base and acceptable vacancy rate. As a result of the limited investments available and increasing private investor appetite, yields are generally well established in the 5% (or lower) to 7% range, where assets are well leased at market rental levels. We hold the view that Outer East office market prime yields are in the range of 5% to 7% trending higher for secondary assets in the range of 7% + where they are analysed at market rental levels. Owner occupiers are also active in the market as are partial owner occupiers and those purchasers wishing to place assets in self-managed superannuation funds. Private investors and owner occupiers are expected to continue to acquire the majority of stock on offer and it will be interesting to monitor current sales campaigns in order to gauge any change in market value levels and sentiment. Low residential yields have seen some investors moving to consider commercial property acquisitions, particularly the more affordable opportunities in the sub $10 million price point. Suburban offices have also proven attractive for Self-Managed Superannuation Funds (SMSF) and this has contributed to rising property values in some of these areas. Owner occupiers traditionally find this product an attractive entry point into the commercial market. There is also some evidence that smaller firms that have traditionally been tenants to third party landlords are now entering the market as a new class of occupier – those that transition to the role of Owner/Landlord with their own business as the Tenant. The property at 78 Main Street is viewed as falling within this property class where it may suit a partial owner occupier. It is a property class that has benefited from the cyclical upswing in commercial property values and its investment appeal is enhanced by its functional improvements and good parking – both sought after attributes in the commercial property market. With respect to the market yields reported, these are now noted to be historically low and often are more so a ‘surrogate’ for underlying land value rather than solely being investment based yields. If development activity and competitive bidding by developer buyers lessened or substantially waned, values for these properties are likely to correct back toward commercial property value levels based solely on investment parameters. Expressed another way, many of the sales have been sold with holding income and represent short to mid- term holding yields on sites that have sold based on or influenced more so on development considerations rather than pure investment parameters. This should be closely monitored by the investment manager for any change in sentiment or market values as it is an indication that the market could be at peak value levels with the potential for a softening of values should these current market conditions begin to change. Rising land tax, holding costs and or interest rate rises may begin to impact on the ability of some categories of owner to hold sites at the levels of values that have emerged over the last 2 years or so. This is an area that should be closely monitored given the ‘lag’ effect of the rating cycle and the likely future impact on the net returns to commercial property owners. Regular valuation updates are recommended for this asset class.




14.0 Sales History Current Contract for Sale The property has been recently contracted for $9,750,000. We have sighted a copy of

the contract for sale and have relied upon this and had regard to the contract price and sale terms in forming our opinion of value.

Contract of Sale Special Conditions

a) The Contract and Vendor Statement state that the property being sold is Lot S2 on Plan of Subdivision PS813236M being part of the land in Certificates of Title Volume 11482 Folio 068 and Volume 11482 Folio 069.

(b) Plan of Subdivision PS813236M is an unregistered plan of subdivision - that is, the relevant authorities have not yet issued a statement of compliance that would enable Plan of Subdivision PS813236M to be lodged at the land titles office for registration.

(c) The Contract states that settlement will occur on the later of:

(i) 60 days from the day of sale (being the date on which both parties have signed the Contract) and

(ii) 14 days after the Vendor notifies the Purchaser that Plan of Subdivision PS813236M has registered.

Sale in Line with Local Market

Yes

Prior Sale We are unaware of any historic sales transactions for the property.




15.0 Market Evidence 15.1 Rental Evidence

Market Rents:

In forming our opinion of the Market Rental Value of the subject property, we have had regard to various lease transactions (a selection of which are detailed below: which for confidentiality reasons cannot be disclosed however have been retained on our files.)

Address Date Term & Options Total Rent Lettable Area Overall Rate

Level 1/143 Main Street, Greensborough, VIC

Jun 2017 Term: 3 yrs Options: nil

$30,000 pa Net

140 sqm $214

Comments: First floor office space with one on-site car space.

4 Hailes Street, Greensborough, VIC

May 2016 Term: 5 yrs Options: 5 yrs

$22,000 pa Net

55 sqm $400

Comments: The property comprises a ground floor retail shop, located within close proximity to Greensborough Plaza.

27/20 Enterprise Drive Hill, Bundoora, VIC

Mar 2017 Term: Options: $28,000 pa Net

129 sqm $217

Comments: Comprises a strata titled office suite situated on the second level of a low rise commercial building located in the University Hill business precinct of approximately 129 sqm. Modern fitout with kitchenette, benefits from 4 onsite carparks. Leased on a net basis at a commencing rent of $28,000 per annum.

8/2 Enterprise Drive, Bundoora, VIC

May 2016 Term: 2 yrs Options:

$31,926 pa Net

93 sqm $343

Comments: The property comprises a ground floor office which had most recently been utilised as a medical clinic and comprised four separate offices and reception.

33/240 Plenty Road, Bundoora, VIC

Jun 2017 Term: 3 yrs Options: 3 yrs

$20,000 pa Net

59 sqm $339

Comments: Comprises a strata titled office suite located in the University Hill business precinct of approximately 57 sqm. Modern fitout with good natural light, benefits from 2 on title carparks. Leased on a net basis at a commencing rent of $20,000 per annum. Net Effective rental shows $320/sqm overall after taking into account the rental incentives.

312/12 Ormond Boulevard, Bundoora, VIC

Apr 2017 Term: 3 yrs Options: 3 yrs

$18,000 pa Net

57 sqm $316

Comments: Comprises a strata titled office suite located in the University Hill business precinct of approximately 57 sqm. Modern fitout with kitchenette, benefits from 2 onsite carparks. Leased on a net basis at a commencing rent of $18,000 per annum. Net Effective rental shows $307/sqm overall after taking into account the rental incentives.


Jun 2016 Term: 5 yrs Options: 5+5 yrs

$34,185 pa net

106 sqm $323

Comments: Comprises a modern first floor office suite with associated car parking for 4 vehicles on Title.




Address Date Term & Options Total Rent Lettable Area Overall Rate


Jun 2016 Term: 5 yrs Options: 5+5 yrs

$23,265 pa Net

66 sqm $353

Comments: Comprises a modern first floor office suite with associated car parking for 2 vehicles on Title.

24 Copernicus Crescent, Bundoora, VIC

Apr 2017 Term: 5 yrs Options: 5+5 yrs

$37,121 pa Net

66 sqm $562

Comments: Comprises a modern ground floor retail shop located within a larger residential development within the Polaris Town Centre.

7 Copernicus Crescent, Bundoora, VIC

Mar 2017 Term: 7 yrs Options: 7 yrs

$54,983 pa Net

106 sqm $519

Comments: Comprises a ground level retail premises situated on the corner of Copernicus Crescent and Galileo Gateway within the Polaris Town Centre development. Utilised as a Newsagent.

Market Rent Conclusions:

Our analysis of recent lettings from within the surrounding area indicates a range of between $214 and $562 per square metre of lettable area for comparable tenancies (both retail and office), inclusive of car accommodation. Variations within this range are largely due to the location, size, use, age, fitout and exposure of the premises. Due to the market evidence above, we consider the current passing rents are reflective of the current market.

We have apportioned and analysed car accommodation evidence from the above office evidence, which indicates a range of between $80 per calendar month to $115 per calendar month. Additionally, from our discussions with the local leasing agent, we have been advised that the subject property could lease secure car parking spaces in the vicinity of $100 per calendar month, and open car spaces for approximately $80-85 per calendar month.

The passing and market rental is illustrated as follows:

Level/Tenancy Tenant

Passing

Rent

Recovered

Outgoings

Passing

Income

Passing

Rate

Market

Rate

Market

Rent

Market

Income

Shop 1, 78 Main Street, GreensboroughWestpac Bank 290 sqm $141,460 $34,455 $175,915 @ $607 @ $607 $175,915 $175,915

Shop 2 & 3, 78 Main Street GreensboroughBendigo Bank 170 sqm $64,380 $20,198 $84,578 @ $498 @ $498 $84,578 $84,578

Suites 1 & 2, Level 1, 78 Main Street, Greensborough. Whitehead Financial 160 sqm $53,600 $19,010 $72,610 @ $454 @ $454 $72,610 $72,610

Suites 3, 4 & 5, Level 1, 78 Main Street Greensborough Mind Aust 350 sqm $89,100 $41,584 $130,684 @ $373 @ $373 $130,684 $130,684

Suite 1, Level 2, 78 Main Street Greensborough Red IT 76 sqm $25,545 $9,030 $34,575 @ $455 @ $455 $34,575 $34,575

Suite 2, Level 2, 78 Main Street, GreensboroughNew Age Insurance Brokers 105 sqm $31,000 $12,475 $43,475 @ $414 @ $414 $43,475 $43,475

Suite 3, Level 2, 78 Main Street, GreensboroughGDM Group 70 sqm $24,550 $8,317 $32,867 @ $470 @ $470 $32,867 $32,867

Suites 4 & 5, Level 2, 78 Main Street, GreensboroughPekada Finance 219 sqm $71,280 $26,019 $97,299 @ $444 @ $444 $97,299 $97,299

Car Parking 20 car/s $24,000 $0 $24,000 @ $100 @ $100 $24,000 $24,000

Totals: $524,915 $171,086 $696,001 $483 $483 $696,001 $696,001

Passing and Market Income Analysis




15.2 Sales Evidence In forming our opinion of value we have had regard to various sales transactions, a selection of which are detailed below:

Property 247 Rosanna Road, Rosanna, VIC

Sale Price $3,700,000

Sale Date 09-Dec-16

Site Area 1,835 sqm

Zoning Commercial 1

Lettable Area 886 sqm

Property Description Comprises a two storey commercial office building with a predominantly glazed building facade. The property was a recently refurbished and benefits from 28 car spaces on site and main road frontage of approximately 20.50 metres to Rosanna Road. Sold via a private treaty with vacant possession.

Analysis Market Net Yield 6.86 % Reversionary Yield 7.22 % Site Rate $2,016/sqm Lettable Area Rate $4,176/sqm

Comparability Comprises a smaller commercial building. Comparable quality of improvements. Broadly comparable location. On balance we expect a lower market yield for the subject property.

Property 40 Graduate Road, Bundoora, VIC


Sale Date 07-Apr-17

Site Area 2,699 sqm

Zoning Special Use Zone

Lettable Area 1,702 sqm

Property Description The property comprises a modern two level office building of 1,702 sqm on a 2,699 sqm site on the corner of Graduate Road and Scholar Drive zoned Special Use Zone - Schedule 3. The property is leased to Publicly Listed company Money 3 Corporation Ltd. (MNY) on a six (6) year term from the 1st of January 2017 with two five (5) year options. The passing rent is $460,000 per annum plus GST with annual 3% reviews. The tenant pays all outgoings including land tax. The property includes on-site parking for 57 cars.

Analysis WALE 5.7 years Initial Net Yield 6.78 % Market Net Yield 6.78 % Reversionary Yield 6.78 % Site Rate $2,512/sqm Lettable Area Rate $3,984/sqm

Comparability Comprises a smaller commercial building on larger allotment. Comparable quality of improvements. Broadly comparable location. On balance we expect a higher market yield for the subject property.




Property 55 Whitehorse Road, Balwyn, VIC


Sale Date 27-Oct-16

Site Area 836 sqm

Zoning Commercial 1


Property Description The property comprises a two level commercial building incorporating a ground level retail tenancy with upper level offices. The main building is constructed of concrete panel external walls with metal deck roof. Car parking is provided for approximately 43 vehicles. The property was sold fully leased to a medical clinic on the ground floor on a 3+3+3+3 year lease from 1 January 2016 with a rental of $98,641 pa net and a financial services company on the second floor on a 10+5 year lease from 1 May 2011 with a rental of $191,953pa. The property was purchased by an international based investor. The property is under Contract for Sale and the sale is subject to confirmation following settlement.

Analysis WALE 3.1 years Initial Net Yield 5.70 % Market Net Yield 5.70 % Reversionary Yield 5.70 % Site Rate $9,605/sqm Gross Building Area Rate $5,870/sqm Lettable Area Rate $6,502/sqm

Comparability Comprises a smaller commercial building. Inferior quality of improvements. Superior inner city location. On balance we expect a lower market yield for the subject property.

Property 425 Riversdale Road, Hawthorn East, VIC


Sale Date 16-Jun-17

Site Area 1,069 sqm

Zoning Commercial 1


Property Description A two-storey office building restored in 1987. The outside walls were refurbished early in 1994 and the ground floor was refurbished in 1998. 31 on-site car spaces. Fully leased to SEDA (Sport Education & Development Australia) until 31 December 2021. Corner location with 3 street frontages. Site area of 1,069 square metres.

Analysis Passing Rent Net $440,280 Market Rent Net $440,280 WALE 4.6 years Initial Net Yield 4.08 % Market Net Yield 4.08 % Reversionary Yield 4.08 % Site Rate $7,811/sqm Lettable Area Rate $7,082/sqm

Comparability Comprises a smaller commercial building. Inferior quality of improvements. Superior inner city location. On balance we expect a higher market yield for the subject property.




Property 68 Main Street, Greensborough, VIC


Sale Date 01-Oct-17

Zoning Activity Centre


Property Description The subject property comprises a modern circa 2016 built, architecturally designed three level mixed use commercial building with additional twenty (14) basement car spaces. Situated on the Eastern side of Main Street between the WaterMarc Aquatic & Leisure Centre and Greensborough Plaza Shopping Centre. Tenant breakdown includes Medical One (89%) and two ground floor retail tenants (11%). The subject was sold returning $426,329 net income per annum on 5 year WALE. Subject was sold off market.

Analysis WALE 5.0 years Initial Net Yield 5.00 % Market Net Yield 5.00 % Reversionary Yield 5.00 % Gross Building Area Rate $5,819/sqm

Comparability Located next door. Comparable quality of improvements. Subject has two tenancies and less common area comparative to the subject which has multiple tenancies. Therefore the lettable area rate is lower than the subject. On balance we expect a similar market yield for the subject property.

Property 30 Janefield Drive, Bundoora, VIC


Sale Date 12-Dec-17

Site Area 5,741 sqm

Zoning Special Use


Property Description The subject property comprises 2015 built, four level commercial building with ground floor retail and upper level office space. Tenant breakdown includes RMIT (53%), Royal District Nursing Services (25%) and five ground floor retail tenants (21%). The subject property benefits from 131 onsite car parks. At the date of sale the subject was fully leased returning $1,585,517 net income per annum on 9 year WALE.

Analysis WALE 9.0 years Initial Net Yield 5.89 % Market Net Yield 5.88 % Reversionary Yield 5.88 % Site Rate $4,691/sqm Lettable Area Rate $6,801/sqm

Comparability Comprises a larger commercial building on a larger allotment. Comparable quality of improvements. Broadly comparable location. On balance we expect a lower market yield for the subject property.




Sales Evidence Conclusions:

The above listed evidence has been analysed to market and illustrates a market yield range between 4.08% and 6.86%.

The most comparable evidence to that of the subject property is 68 Main Street, Greensborough (5.00%) and 30 Janefield Drive, Bundoora (5.88%), which we have relied on more-so in adopting our capitalisation rate of 5.25%.




16.0 Valuation Methodology & Conclusions 16.1 Adopted Valuation Approach The most appropriate method of valuation for a property of this nature is the capitalisation of income supported by direct comparison on a rate per square metre.

Following is a brief description of the main Valuation Approaches and Methods. A full description is provided within International Valuation Standards and Technical Information Papers.

16.2 Income Approach

Capitalisation Method

The capitalisation method is a method that can be applied across a broad cross-section of asset types (including income producing property, going concerns, specialised assets, and intangible assets) and can be applied to varying types of income. Typically in assessing the Market Value of “property” the capitalisation method is applied to rents whilst in assessing the Market Value of “going concerns” the method is applied to net profits.

The capitalisation method is based on the concept that for income producing assets the price a prospective purchaser will be prepared to pay will be based on (amongst other things) the level of income and the return required for the investment of capital.

The capitalisation method is most commonly used as the primary valuation method to determine the Market Value of income producing assets (ie including investment properties whether leased properties, owner occupied properties, or vacant properties intended to be held as an investment).

We have had regard to yields within our comparable evidence which indicates a market yield range of between approximately 4.08% and 6.86%. We have adopted a capitalisation rate of 5.25% in our calculations herein.

Within our valuation calculations we have made an allowance for Land Tax ($10,500) which is a non-recoverable outgoing under the Retail Leases Act (2003), which we believe would apply to the subject property.




Market Income Capitalisation Method

Calculations

Our valuation calculations are summarised as follows:

Market Income Capitalisation Method

Market Income: $696,001

Less Outgoings: -($181,580)

Net Market Annual Income: $514,421

Capitalised @ 5.25%

Capitalised Value (before adjustments): $9,798,503

Capital Adjustments:

Sub-Total: $0

Total Market Value: $9,798,503

Indicates, Total Market Value: $9,800,000

Sensitivity Analysis:

Net Market Annual Income: $514,421 $514,421 $514,421

Capitalised @ 4.75% @ 5.25% @ 5.75%

Capitalised Value: $10,829,924 $9,798,503 $8,946,459

Capital Adjustments: $0 $0 $0

Total Market Value: $10,829,924 $9,798,503 $8,946,459

Indicates Total Market Value: Rounding $25,000 $10,825,000 $9,800,000 $8,950,000

Reflecting: Initial Yield 4.75% 5.25% 5.75%

Reversionary Yield 4.75% 5.25% 5.75%

$ psm Lettable Area $7,517 $6,806 $6,215




16.3 Market Approach

Direct Comparison Method

This valuation method is the most frequently used method and involves comparison of the property to be valued with sales of similar properties. Comparisons can be made in many forms including straight comparison, or analysis on a rate per area basis (such as rate psm of building area, or rate per sqm of land). Points of difference are taken into account by the Valuer including the location of the properties, differences in size and quality of accommodation, land areas etc.

Our analysis of the available sales evidence detailed within this report indicates a value range of between $3,984 and $7,082 per sqm of lettable area. The evidence supporting a value towards the upper end of the range is generally reflective of the more modern construction, strong location/position and smaller sized premises. The evidence supporting a value towards the lower end of the range is reflective of the inferior accommodation, and larger size of the premises and exposure of the property. With consideration for the above, we have adopted a lettable area rate range from $6,500 to $7,000 psm, i.e. $6,750 per square metre of Lettable Area.




16.4 Valuation Reconciliation & Conclusion

Valuation Reconciliation

Having regard to the above calculations, current Contract of Sale and after taking into account both the positive and negative attributes of the property, from an objective and unbiased, yet balanced point of view, we are of the opinion that the Market Value of the property is $9,750,000 (Nine Million, Seven Hundred and Fifty Thousand Dollars) GST exclusive – As If Complete in the Current Market.

17.0 Goods & Services Tax Treatment of GST All amounts and values expressed in this report are exclusive of GST unless otherwise

specified.

Recommendation If there is any uncertainty as to the treatment of GST then we recommend you seek advice from a qualified accountant regarding the nature of any potential transaction or services supplied, the GST status of the parties involved, and confirmation of any potential GST liability.

Valuation Reconciliation

Market Approach (Direct Comparison Lettable Area Basis (and Sensitivity Analysis)) $9,700,000

Income Approach (Market Yield) $9,800,000

Contract Price $9,750,000

Adopted Valuation: $9,750,000

Adopted Valuation reflects:

Rate psm Lettable Area: $6,771

Initial Yield: 5.28%

Market Yield: 5.28%

Reversionary Yield: 5.28%




18.0 Estimated Insurance Value Insurance Estimate We have determined the replacement value for insurance purposes at $6,725,000

inclusive of GST. In the event of a loss, actual replacement costs may vary depending upon the design and specifications of buildings and other improvements which are to be rebuilt.

Basis of Estimate Our insurance replacement value has been assessed in accordance with the Australian and New Zealand Valuation Technical Information Paper Valuations for Insurance Purposes

Inclusions in Estimate The insurance replacement value includes:

Professional fees;

Costs for demolition and removal of debris;

Cost escalations;

A rental component for alternative accommodation or loss of rental income;

Goods and services tax;

Exclusions in Estimate The insurance replacement value excludes:

Computer or electrical equipment, fit-out, and personal items (ie contents);

Loss of profits;

Any allowance for loss in land value as a consequence of the existing improvements not being permitted to be rebuilt due to changes in planning controls, development standards or the extinguishment of existing use rights;

Any increase in proportionate costs as a consequence of a partial loss. In the event of a partial loss it is possible that costs to rectify damage caused to the affected area, will exceed the respective proportionate amount of our assessment, particularly in the case of heritage buildings;

Costs for removal of asbestos; and

Increased costs as a consequence of widespread catastrophic events.




19.0 Valuation 19.1 Market Value As If Complete - Subject to Existing Leases

We are of the opinion that the Market Value of the freehold interest of the property subject to existing lease and tenancy agreements, as at 5 February 2018 subject to the comments in this report, and upon issue of separate individual certificate of title is:

$9,750,000

(Nine Million, Seven Hundred and Fifty Thousand Dollars)

Interest Valued Fee simple subject to existing leases


Date of Valuation 5 February 2018

Date Issued 29 March 2018


Signatories

John O'Grady AAPI CPV Head of Department - Commercial API No: 62056 Inspecting Valuer

Scott Chapman AAPI CPV State Director API No: 63463 Counter Signatory

Important This valuation is subject to the definitions, qualifications and disclaimers and other comments contained within this report.

Counter Signatory The counter signatory has reviewed the valuation report and working papers in the capacity of Supervising Member and is satisfied that there is a reasonable basis for the valuation opinion. The counter signatory confirms that the report is genuine and is endorsed by Opteon Property Group Australia. The counter signatory did not inspect the subject property and may not have inspected comparable evidence. The opinion of value has been arrived at by the Valuer who undertook the inspection and prepared the valuation calculations.




20.0 Assumptions, Conditions & Limitations Area Disclaimer In the event actual surveyed areas of the property are different to the areas adopted in this valuation the

survey should be referred to the valuer for comment on any valuation implications. We reserve the right to amend our valuation in the event that a formal survey of areas differs from those detailed in this report.

Asbestos Disclaimer We are not experts in the identification of Asbestos and therefore, in the absence of an environmental consultant’s report concerning the presence of any asbestos fibre within the subject property, this valuation is made on the assumption that there is no: asbestos material present; health risk from asbestos within the property; or there is any material expense relating to the repair, management or replacement of asbestos materials in the foreseeable future. Should an expert’s report establish that there is an asbestos related health risk or a requirement to undertake asbestos remediation works then we reserve the right to review this valuation.

Building Services Disclaimer No documentation or certification has been sighted to verify the condition of building services, and we have assumed that all building services are: adequate in specification; in good operational condition; and satisfactorily maintained.

Encroachments The valuation is made on the basis that there are no encroachments (unless otherwise noted) by or upon the property and this should be confirmed by a current survey report and/or advice from a land surveyor. If any encroachments are noted by the survey report the valuer should be consulted to assess any effect on the value stated in this report.

Environmental Disclaimer This report is not an environmental audit and no advice is given in any way relating to environmental or pollution matters. Any comments given as to environmental or pollution factors in relation to the property are not given in the capacity as an expert. This assessment of value is on basis that the property is free of contamination or environmental issues affecting the property not made known to the valuer. In the event the property is found to contain contamination the matter should be referred to this office for comment. Given contamination issues can have an impact on the Market Value of the property, we reserve the right to review and if necessary vary our valuation if any contamination or other environmental hazard is found to exist.

Full Disclosure Disclaimer Whilst we have attempted to confirm the veracity of information supplied, the scope of work did not extend to verification of all information supplied or due diligence. Our valuation and report has been prepared on the assumption the instructions and information supplied has been provided in good faith, is not in any way misleading or deceptive, contains a full disclosure of all information that is relevant, there are no undisclosed agreements in place that affect the property and the sale price includes GST. The valuer and valuation firm does not accept any responsibility or liability whatsoever in the event the valuer has been provided with insufficient, false or misleading information.

Future Value Any comments are made in relation to future values are based on general knowledge and information currently available. These comments should not be construed as a prediction of future value levels or a warranty of future performance as the property market is susceptible to potential rapid and unexpected change caused by multiple factors. Ultimately current expectations as to trends in property values may not prove to be accurate.

Due to possible changes in the property market, economic conditions, occupancy status and property specific factors, we recommend the value of the property be reassessed at regular intervals

Geotechnical We have not sighted a geotechnical engineers’ survey of the property. We are not experts in the field of civil or geotechnical engineering and we are therefore unable to comment as to the geotechnical integrity of the ground and soil conditions. It is specifically assumed that there are no adverse geotechnical conditions that compromise the utility of the property for the current or highest and best use. In the event there is found to be adverse ground conditions we recommend the matter be referred to this Company for comment.

Heritage Disclaimer Our valuation has been assessed having regard to the nature of any buildings on the property and any known heritage listings. However we have not obtained formal confirmation of heritage listings beyond what is available in the public domain and identified in this report. Our valuation assumes, unless otherwise specified, that any heritage issues (including Aboriginal) do not impact on the continued and/or highest and best use of the property. If there is doubt in relation to such issues we recommend written application be made to the relevant authorities.

Identification The property has been identified as per details provided within this report. The identification comments are not provided in the capacity of an expert, and a surveyor (not a valuer) would be able to confirm the identification of the property and/or any encroachments by way of undertaking a site survey.

Inconsistencies in Assumptions

If there is found to be any variance, inconsistency or contradiction in any of the assumptions within this report then this may have an impact on the market value of the property and we recommend this valuation be referred back to the Valuer for comment.




Insurance Value The insurance reinstatement value includes GST but excludes all personal items and contents; loss of rental income or profits; any allowance for loss in land value as a consequence of the existing improvements not being permitted to be rebuilt due to changes in planning controls, development standards or the extinguishment of existing use rights; any increase in proportionate costs as a consequence of a partial loss; costs for removal of asbestos; and increased costs as a consequence of widespread catastrophic events. Some or all of the itemised cost factors could be automatically excluded in the insurance policy; therefore it is important to establish the extent of such inclusions with the insurer. We recommend you investigate the terms and conditions of your insurance policy to determine the extent of inclusions and exclusions or discuss the issue with your insurance broker or insurer. This Insurance Value should only be regarded as an estimate and should a more accurate assessment be required we recommend a quantity surveyor be engaged.

Leases and Rents This valuation is based on the lease terms and conditions summarised within this report sourced from a review of the available lease documentation and tenancy schedules made available. This valuation is made on the basis that the tenants are paying rent in accordance with the lease agreements and there are no undisclosed rental subsidies, rent free periods or other incentives that have been provided by the lessor. Our valuation assumes there are no material breaches of the essential terms of existing Leases by the existing Lessees and no material rental arrears at the date of Valuation.

Market Change This valuation is current as at the Date of Valuation only. The value assessed herein may change significantly and unexpectedly over a relatively short period (including as a result of general market movements or factors specific to the particular property or factors that the Valuer could not have reasonably become aware as at the date of the Report). We do not accept liability for losses arising from such subsequent changes in value. Without limiting the generality of the above comment, we do not assume any responsibility or accept any liability where this valuation is relied upon after the expiration of 90 days from the date of valuation, or such earlier date if you become aware of any factors that have any effect on the valuation. We recommend the valuation be reviewed at regular intervals.

Market Evidence Information Availability

In preparing this valuation we have undertaken those investigations reasonably expected of a professional valuer having regard to normal industry practice so as to obtain the most relevant, available, comparable market evidence. Whilst we believe the market evidence information and any other information provided to be accurate, not all details can and have been formally verified. Due to privacy laws, confidentiality agreements and other circumstances beyond our control, the valuer may not have had access to:

Personal details of parties involved in transactions (including the relationship of the parties);

Information on recent transactions that are yet to become public knowledge; and

Copies of leases or contracts to confirm rents or prices and to ascertain whether or not rents or prices are inclusive or exclusive of GST.

Native Title Assumption We are not experts in native title or the property rights derived there from and have not been supplied with appropriate expert advice or reports. Therefore, this valuation is made assuming there are no actual or potential native title interests affecting the value or marketability of the property.

Planning Disclaimer Town planning and zoning information was informally obtained from the relevant local and State Government authorities and is assumed to be correct. Should the addressee require formal confirmation of planning issues then we recommend formal application be made to the relevant authorities to confirm planning details.

Publication of Report The publication of the valuation or report in whole or any part, or any reference thereto, or the names and professional affiliations of the valuers is prohibited without the prior written approval of the valuer as to the form and context in which it is to appear.

Site Survey Disclaimer This report is not a site survey and no advice is given in any way relating to survey matters. Any comments given in relation to the property are not given in the capacity as an expert, however, are based on our inspection of the property and review of the Certificate of Title plans. Should the addressee require absolute certainty in relation to the site area, dimensions or possible encroachments we recommend that a surveyor be engaged to provide appropriate advice and a survey of the property if considered necessary. In the event there are any fundamental inconsistencies between any site survey undertaken and site detail adopted in this valuation, the survey should be referred to the valuer for comment on any valuation implications (including amendment of our valuation if considered necessary).




Structural Disclaimer This report is not a structural survey and no advice is given in any way relating to structural matters. Any opinion given as to the condition of the improvements on the property is not given in the capacity as an expert. A structural report on the building and/or its plant and equipment has not been sighted, and nor have we inspected unexposed or inaccessible portions of the premises. Therefore we cannot comment on the structural integrity, any defects, rot or pest infestation (or damage from pest infestation) of the improvements, any use of asbestos or other materials now considered hazardous or areas of non-compliance with the Building Code of Australia, other than matters which are obvious and which are noted within this report. This valuation assumes the building is structurally sound; that building services are adequate and appropriately maintained; the building complies with applicable Council, building, health, safety and fire regulations, laws, bylaws, rules, licences, permits and directives; and is free of asbestos or other defects, unless specified otherwise. Should an expert’s report establish that there is any damage of the varieties noted above then we reserve the right to review this valuation.

Third Party Disclaimer This report has been prepared for the private and confidential use of our client, Primary Securities Ltd 0for the specified purpose. It should not be reproduced in whole or part without the express written authority of Opteon Property Group Australia or relied upon by any other party for any purpose and the valuer shall not have any liability to any party who does so. Our warning is registered here, that any party, other than those specifically named in this paragraph should obtain their own valuation before acting in any way in respect of the subject property.

Title and Unregistered Instruments

For the purpose of this report we have assumed that the title information provided to us is correct. Our Valuation has been assessed assuming the property is only affected by encumbrances noted on Title with the exception of registered instruments (eg. mortgages or caveats) that are normally and expected to be discharged prior to transfer of the property. If there are any encumbrances, encroachments, restrictions, leases or covenants which are not noted on the title, they may affect the assessment of value. If there are errors or omissions found to exist on the title documents we should be notified and we reserve the right to review our valuation.