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Important information This Information Memorandum (IM) is dated on or about 3 June 2019 and has been issued by CorVal Partners Limited ACN 130 628 830 (Trustee or RF CorVal). RF CorVal is the holder of Australian Financial Services Licence No. 326118. This IM is not a prospectus or a product disclosure statement, and therefore does not have to comply with the relevant provisions of the Corporations Act 2001 dealing with disclosure documents. This IM is for the sole use of the recipient and may not be reproduced or distributed to any other person. If you have received this document from anyone other than RF CorVal, please return it to RF CorVal. This IM outlines some of the key points in relation to the investment. The matters included in this IM do not constitute a comprehensive statement of the costs, benefits, risks and other characteristics of the investment. Potential investors should read this IM in its entirety, obtain advice from a suitably qualified professional advisor and make their own assessment of the investment before deciding to invest. This IM does not constitute advice on legal, taxation and investment matters and does not take into account the investment objectives or the personal financial circumstances of any person to whom it is provided. Disclaimer Whilst this IM includes information about the nature of the investment, the targeted properties and other matters, it is not exhaustive in its contents and should not be considered as such. All projections and forecasts in this IM are for illustrative purposes only. They are based on the opinions of, and the assumptions and qualifications made by the directors of RF CorVal as at the date of this IM. Actual results may be materially affected by changes in economic and other circumstances. Any reliance placed upon the accuracy of projections, forecasts and other information provided in this IM, and the appropriateness of opinions, assumptions and qualifications used, is a matter for your own commercial judgement. No representation or warranty is made that any projections, forecasts, values, assumptions or estimates contained in this IM can or will be achieved. RF CorVal and its directors, officers, employees, advisers and representatives give no warranty and make no representation in respect of the contents of this IM, nor do they accept any responsibility for the accuracy, reliability or completeness of the information provided in this IM. Investors Investment is only available to investors who are “wholesale clients” within the requirements of section 761G of the Corporations Act 2001 (Cth) or who are otherwise entitled to invest – see section 10 for more detail.

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1 Executive Summary 6

2 Manufactured Housing Estate: Market Overview 11

3 The Operator: Vivacity 21

4 About the Fund 23

5 Fund Investments 31

6 RF CorVal 37

7 Risk Factors 40

8 Tax Information 44

9 RF CorVal Fees 48

10 Investors and Minimum Investment 49

11 Additional Information 52

12 Conclusion and Transaction Timing 53

Application Form 55

Accountant’s Certificate 57

Adviser’s Certificate 58

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1 EXECUTIVE SUMMARY CorVal Partners Limited (RF CorVal) is pleased to present to investors the opportunity to invest in the RF CorVal Manufactured Housing Estate Fund (Fund).

The Fund intends to pursue a “develop to own” strategy, forecasting total pre-tax returns of 15-20% per annum over the Fund term, with the ultimate objective of owning and operating a portfolio of quality Manufactured Housing Estates (MHE), providing Australia’s ageing population with attractive, affordable accommodation.

A MHE is a land lease community in which residents acquire and own their own individual home but lease the land, upon which the home is built, from the owner of the estate under long term Site Agreements. In this instance, the owner of the estate will be the Fund.

The Fund intends to develop a range of modern MHE properties, offering substantial dwellings that are similar to conventional residential accommodation, which will generally be constructed on site. The estates will be aimed at people generally aged 55 years and over, and will be operated as high-quality communities, offering residents various amenities such as swimming pools, community or recreational halls, bowling greens and barbeque/entertainment areas, all of which will be maintained by the owner/operator of the estate.

The Fund will enter into an exclusive joint venture agreement with Vivacity Property Pty Ltd (Vivacity), a specialist MHE operator that will be responsible for sourcing and acquiring various sites on which the respective MHE properties will be developed, together with marketing and selling the individual MHE dwellings, as well as the ongoing operation of the completed estates. Vivacity has recently been established by its principals, who have a successful track record in the MHE industry over the past 10 years (see Section 3).

Under the terms of the joint venture agreement, the Fund will provide the equity required to acquire and develop the respective MHE properties, and after repayment to the Fund, of an amount equal to the initial Fund equity, net project cash flows will be shared 50/50 between the Fund and Vivacity.

To provide a further alignment of interest as between the Fund and Vivacity, Vivacity will subscribe between $2 to $3 million of the Fund’s equity (see Section 3 for further details on the alignment of interest between the Fund and Vivacity).

RF CorVal considers the MHE sector to be an attractive and emerging property asset class due to the underlying drivers of demand and the secure, long-term income offered by the completed estates, noting:

- the strong forecast growth in Australia’s ageing population, with over 8.8 m people, or 22% ofAustralia’s forecast population, expected to be aged 65 or older by 2057;

- the lack of retirement/superannuation savings for many Australians, which increases the appeal of aMHE property, as the relatively low upfront cost provides an attractive form of equity release forretirees;

- poor housing affordability, with a MHE property offering a lower cost and often higher qualityhousing option for older age Australians in comparison to the retirement village or existing residentialoptions;

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- rental income is often implicitly subsidised by government, as pensioners can access governmentrental assistance to partly cover the weekly land rental costs, further enhancing affordability;

- in comparison to the deferred management fee structure and high costs associated with retirementvillages, the MHE structure is cleaner and simpler; and

- residents enter into long-term Site Agreements, with an outgoing resident having full flexibility andcontrol over the sale of their individual home, with any purchaser of that home then having the SiteAgreement assigned to them, thereby ensuring both long term tenure to the new purchaser, as wellas continuity of rental income to the Fund.

Other important factors that RF CorVal considers relevant to this investment are:

- the MHE market in Australia, particularly when compared to international examples such as the US, isstill relatively small and highly fragmented, which therefore presents an opportunity for significantfuture growth in this property sector;

- research indicates that there are approximately 8.8 million manufactured homes nation-wide in theUS, representing circa 10% of total housing stock;

- capitalisation rates for prime MHE assets within the US currently range between 4.5-5.5%, comparingfavourably to similar style assets within Australia, where cap rates currently range between 6.5-7.5%;

- most incoming MHE residents typically fund the purchase of their MHE property from the sale oftheir existing residential property, with a net surplus of funds being generated on the respective saleand purchase. The primary benefit of this is that it frees up funds that may then be applied to otherpurposes, such as investment, travel or the purchase of discretionary items, thereby furtherenhancing their experience on moving into a MHE community;

- the MHE property sector has been a strong performer in the ASX listed sector, with both:

a) Ingenia Communities Group (ASX code INA), trading at a market cap of circa $735 m, a premiumover net assets of circa 20% and with its shares having increased over 10 times over a ten-yearperiod; and

b) Lifestyle Communities Limited (ASX code LIC), trading at a market cap of circa $630 m, a premiumover net assets of circa 180% and with its shares having increased over 15 times over the same ten-year period;

- the strong underlying investment fundamentals, in particular:

a) a growing annuity income stream from the weekly rental received from residents;

b) no leasing up costs or “down time” in the annuity income stream from any vacancies that areassociated with other property asset classes such as office, retail, industrial and hotel propertysectors as the outgoing resident (seller) is liable for the weekly payments until the Site Agreementis assigned to an incoming resident (purchaser);

c) lower capital expenditure in comparison to most other property sectors;

d) ownership of the underlying land is retained by the Fund, which over time, would be expectedto increase in value; and

e) the potential for larger institutional investors to move into the sector over time, given theattraction of the strong underlying investment features of an investment into a portfolio of MHEproperties. If this were to eventuate, it may provide both a liquidity option for the Fund, as wellas the potential for strong yield compression, and therefore a capital uplift.

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- The “develop to own” strategy that the Fund intends to pursue will enable investors to benefit from:

a) any development profit associated with the development of the estate and the sale of theindividual MHE dwellings to residents;

b) the net rental income generated by the secure, long term Site Agreements with residents; and

c) the value of the rental income agreements, in much the same way as the value of a long-termlease to a tenant in a commercial office property.

RF CorVal forecasts that the Fund will deliver a total pre-tax return of circa 15-20% per annum over a long-term investment horizon, which is considered attractive in light of the relatively low risk profile of the underlying property.

RF CorVal and Vivacity will work together to identify attractive sites for the future development of MHE communities that meet the Fund’s investment objectives. Once identified, detailed due diligence will be undertaken, including commissioning market research to understand the supply/demand dynamics which will then drive the key development assumptions. The Fund will only proceed with projects once the Fund’s Investment Committee is satisfied with the due diligence findings, forecasts and assumptions and considers the project to be appropriate for the Fund. Currently, RF CorVal and Vivacity have a number of potential sites under option and, subject to the completion of due diligence to the satisfaction of the Investment Committee, it is expected that these will be appropriate initial investments for the Fund.

Further details on the Fund’s Investment Committee is provided in Section 4.

Investment Objective Provide investors with exposure to the MHE property sector, with returns to be generated both from potential development profits, as well as the long-term secure cash flow and value that is forecast from this asset class.

Target Returns IRR of 15-20% per annum, net of fees but before any performance fee and tax.

Investment Strategy “Develop to own” and operate a portfolio of MHEs.

Targeted Equity Raise* $20m-$30m

Priority will be given to Fund investors for any additional equity or MHE related Fund offerings which RF CorVal may present over time.

Estimated Closing Date 5 July 2019

Fund Structure As the Fund will be undertaking both development activity and passive investment activity, it will be structured as an operating trust and a land holding trust, with investors to be issued Stapled Security Interests in both trusts.

Nature of Fund and Security Interests

Unlisted, unregistered wholesale managed investment scheme with investors to be issued partly paid Stapled Security Interests in the Fund at $1.00.

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Investment Period Two years from the Closing Date, with the Equity to be progressively called or committed over this period. Any net proceeds the Fund receives from development activity may be reinvested or committed during the Investment Period.

Term and Liquidity The Fund does not have a fixed term.

Investors should view this as a long-term investment of at least seven to ten years, however investors will be offered liquidity windows on 30 June 2024 and every five years thereafter, provided sufficient liquidity is available within the Fund. Redemptions will be priced based on the net asset value of the Fund at the relevant date, adjusted for notional selling costs.

The Fund will endeavour to satisfy any withdrawal request from available funds as soon as practical. Available funds may include surplus cash, or funds from increasing debt facilities up to the Fund’s target gearing level of 55%.

If withdrawal requests are received from investors representing more than 50% of the equity in the Fund, RF CorVal will seek to dispose of the Fund’s investment in the MHE Co-venture in an orderly manner and return the capital to all investors.

At other times, RF CorVal will offer to match investors wishing to exit the Fund with prospective new investors, where possible.

As the Fund intends to develop a portfolio of high quality MHE assets, there may be an opportunity in the future, once sufficient scale has been achieved, for the Fund to sell 100% of its interest in the portfolio, including to an institutional investor, or via a public listing, given the appeal of the long-term secure income stream offered by the completed estates.

Gearing The Fund intends to employ appropriate gearing both during the development period and once the assets become operational, the Fund will target an LTV ratio of up to 55%.

Joint Venture Arrangements

The Fund will enter into an exclusive joint venture agreement with Vivacity, a specialist operator of MHEs that will be responsible for sourcing and acquiring sites, developing the MHEs, marketing and selling the dwellings, as well as the ongoing operation of the completed estates.

Under the terms of the joint venture agreement, the Fund will provide the equity required to acquire and develop the respective MHE communities, and, after repayment to the Fund of an amount equal to the Fund equity, net project cash flows will be shared 50/50 between the Fund and Vivacity.

Vivacity will earn a development management fee of 3% of development costs (excluding land costs) during the development period for each MHE and once completed Vivacity will earn an on-going market-based property management fee for its role as the operator of the respective MHE. This fee will be on a sliding scale dependent on the size of the estate and will typically be $60,000-$180,000 per annum per MHE, representing circa 3-6% of gross rental income.

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RF CorVal Fees RF CorVal will be entitled to the following fees:

An acquisition fee equal to 0.3% of total development costs up to a maximum of $300,000, for each MHE project, payable on the later of the settlement of the land or securing development approval;

An asset management fee equivalent to 0.25% of total development costs per annum per MHE project during the development period, converting to $120,000 per annum per MHE project once the estate reaches a stabilized operational level, payable monthly in arrears; and

A performance fee of 20% over a Fund level equity, pre tax IRR of 12% per annum, with the fee to be determined on any sale of the Fund’s interest in the MHE co-venture or alternative exit of the Fund’s investment in the MHE portfolio.

Alignment of Interests It is intended that the directors, senior management, shareholders and other related entities of RF CorVal will subscribe for a minimum of 10% of the Fund’s Equity.

Vivacity will subscribe for between $2m to $3 m of the Fund’s Equity.

* RF CorVal retains the discretion to close the Fund with a greater or lesser amount than the targeted Equity amount

KEY DATES

The target Equity raising for the Fund is $20m-$30m, with Stapled Security Interests to be issued at $1.00. Given the nature of the Fund and the two-year Investment Period, Stapled Security Interests will be issued on a partly-paid basis, with the first $0.10 per Stapled Security Interest to be paid upon application.

Completed application forms together with the initial $0.10 per Stapled Security Interest in applications monies will be required no later than 5 July 2019.

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2 MANUFACTURED HOUSING ESTATE: MARKET OVERVIEW

INTRODUCTION

A MHE property is a land lease community in which residents acquire and own their homes but do not pay for the land, instead they enter into long-lease arrangements with the owner of the estate, and pay a weekly rental generally in the range of $150-$200 (Site Agreements). Importantly, the resident retains the right to long term tenure and other benefits from the estate facilities, which are provided by the MHE owner/operator.

MHE properties are typically aimed at people aged 55 years and over, and operate as a community, offering residents various amenities such as swimming pools, community or recreational halls, bowling greens and barbeque/entertainment areas.

The typical MHE property is underpinned by large land holdings and secure long-term income streams, with the owner of the estate retaining possession of the land and receiving weekly rental payments, often underpinned by government rental assistance programs.

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RESIDENT’S PERSPECTIVE

As MHE residents do not own the land on which they live, they are considered to be paying rent by the government and they are consequently eligible for rental assistance, provided they meet the qualifying criteria. Another benefit to residents is that upon the sale of the home, the price is generally not subject to a deferred management fee, as is typical in traditional retirement villages.

Residents are responsible for their own utilities expenses, insurance and maintenance of their home, however do not incur some of the usual home ownership running costs associated with freehold title such as rates and land tax. The acquisition of the homes is also not subject to stamp duty.

There are a number of benefits that the purchase of a MHE property offers residents, particularly those at, or close to retirement, when compared with alternative residential options as summarised below:

Relative affordability MHEs typically offer a lower cost retirement option than traditional retirement villages or other residential options, with the quality of a modern MHE comparable to other new-build, higher cost accommodation and are often superior to the traditional retirement village.

Lower costs No stamp duty on the acquisition of MHE property and ongoing rates or land tax are not payable by residents.

Rental assistance Residents can often gain access to government rental assistance to partly cover the weekly land rental costs, subject to the resident satisfying the qualifying criteria.

Secure independent living MHE property offers older residents the benefit of independent living with like-minded people in a secure environment, with estates generally being secure and monitored by CCTV and other security measures.

Quality community facilities

The estates typically provide a multi-purpose clubhouse, swimming pool, and rooms for meeting/socialising/games, providing an ideal opportunity for residents to meet, remain active and enjoy their retirement.

Straightforward ownership structure Occupiers will be in ownership of the dwellings under a long-term leasehold agreement between themselves and the estate owner, and upon the disposal of their property, benefit from 100% of any capital appreciation on their respective house.

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Potential for release of equity The cost of a MHE dwelling is generally 60-80% of the local median house price, offering residents the opportunity to release equity from the sale of the family home.

OWNER/OPERATOR’S PERSPECTIVE

MHE properties offer stable, ongoing income streams which are frequently underpinned by government rental assistance. Investment capital into the sector is becoming increasingly popular for the following reasons:

- Secure Income: Once dwellings are completed, residents are required to pay an ongoing rental that is generally subject to annual increases;

- Potential for Capital Appreciation: In Australia, the MHE property sector currently offers relative value when compared with more mature markets. For example, investment yields in Australia currently range between 6.5% and 7.5%, whilst average yields in the US currently average closer to 5%, which is reflective of the MHE property sector being a much larger and more mature sector in the US in comparison to Australia;

- Capital Light Investment: Once completed, the estates have minimal capital expenditure requirements, generally comprising minor repairs and maintenance throughout the MHE community. It should be noted that individual residents are responsible for capital costs and general repairs and maintenance on their own respective MHE property;

- Rental Subsidies: As MHE residents do not own the land on which they live, they are considered to be paying rent by the government and they are consequently eligible for rental assistance (provided qualifying criteria are met). Rental assistance is generally provided under various types of pensions such as aged disability or veteran pensions;

- No Downtime: Outgoing residents are required to source a purchaser for their dwelling to whom the Site Agreement will be assigned. Until such time, the outgoing resident will be responsible for the payment of rent, with any arrears to be deducted from the sale of the dwelling (if need be).

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MARKET DRIVERS AND OVERVIEW

The MHE market in Australia has continued to evolve and mature over the last twenty years, with demand largely driven from increasing financial pressure on Australia’s ageing population. Key drivers attributing to this are detailed below:

65% of senior Australians expect to receive some form of government income support in retirement.

It is predicted that by 2057, 8.8m or 22% of Australians will be aged over 65.

Home ownership rates are decreasing. Proportion of Australians who own their own home decreased from 35% in 2003-04 to 30% in 2015-2016.

Average superannuation balances for people aged 55 and over is approximately $128,285.

Most recent census surveys indicate that 49% of men and 45% of women expect to receive a government pension on retirement.

Over 1 million households are experiencing mortgage stress, paying over 30% of income on housing.

Sources: ABS, ASIC, ASFA, Australian Institute of Health and Welfare, Macro Business, Core Logic

Notwithstanding financial pressures on Australia’s ageing population, further leading indicators are contributing, and will continue to contribute, to the growth in the MHE sector including:

Limited Availability of Affordable Housing

Australian house prices, over the last ten years, have materially increased, driven by demand factors including:

a) population growth;

b) increased immigration, and

c) increased foreign investor interest.

House prices, combined with stagnant wage growth, have contributed to high levels of housing unaffordability for many older aged people in Australia.

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Commonwealth Support for Aged Care

Commonwealth initiative to assist retirees live independently for as long as possible under “Living Longer Living Better” policy.

Aged care and pension expenditure currently accounts for 3.8% of GDP and is expected to increase to 4.4% of GDP by 2054-55.

Other Trends

Currently 12.6% of the retiree population in the US reside in MHE communities, which compares to 5.7% in Australia and forecast to be 7.5% by 2025.

Retiree penetration is still low compared to the traditional retirement village, which are burdened by the negative sentiment associated with deferred management fees and other significant costs upon the sale of the property or death of a resident.

Increasing life expectancy amongst Australians will contribute to retirees living longer, and therefore, seeking higher quality accommodation in their retirement years in a modern MHE community.

Below is a comparison between the MHE, or land lease, model and the more traditional retirement options, futher emphasising why the shift to the MHE model is expected to continue over time:

Sector Resident Profile Typical Features

Nursing Homes - Non-independent and can no longer live unassisted.

- 80+ years.

- Nursing assistance.

Retirement Village - Retirees looking to downsize. - Can fund their residence and

lifestyle. - 70-85 years.

- Offers more services than MHEs (e.g. home maintenance, care).

- DMF ownership structure. - No rental assistance.

MHE - Downsizing retirees (can release equity from residential house).

- Seeking independent and active lifestyle.

- +55 years.

- Community living and facilities. - Rental Assistance available. - Autonomy, independence and

flexibility.

Residential Housing - Independent and able to sustain lifestyle in family home.

- Apartments now an option.

- Autonomy, independence and flexibility.

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SUMMARY OF COMPETITIVE LANDSCAPE

A sector traditionally dominated by private single owner operators and a number of specialist ASX property groups, the MHE market has evolved into one that is attracting the interest of large-scale institutional investors. Australian MHE properties are now becoming recognised as a legitimate property sector, with significant amounts of capital now being invested into the sector.

Investor interest from major offshore operators has increased significantly in recent years, and this was particularly illustrated by the recent Hometown/Gateway Lifestyle takeover. Hometown, a US based operator, established itself within the Australian MHE market with its first acquisition of two properties. This was followed by a $57m acquisition of three properties across NSW and QLD in 2018. In June 2018, Hometown made a $635m offer to takeover ASX listed Gateway Lifestyle. A revised offer of approximately $680m was submitted in September 2018 with the Gateway board unanimously recommending the offer be accepted. The offer reflected $2.25 per share. Interest in the takeover was also reportedly received from Canada’s Brookfield.

Currently, the two major ASX listed MHE operators within Australia are Lifestyle Communities (LIC) and Ingenia Lifestyle (INA). The table below summarises key information regarding these two operators:

Operator Lifestyle Communities (LIC) Ingenia Lifestyle (INA)

Current Market Cap* $630m $735m

ASX Price – May 2009 $0.38 $0.3

ASX Price – May 2014 $1.39 $2.69

ASX Price – May 2019 $6.04 $3.11

ASX Price – 10 Year Increase 15.9x 10.4x

No. of Communities/Parks 16 66

Location VIC NSW, QLD, VIC

Comment Greenfield MHE operator, Victorian Focus.

Combination of short stay and permanent homes. Developer and acquirer of existing parks.

* As at the date of this IM

The 10 year historical performance of each operator is detailed in the below graphs:

Lifestyle Communities 10 Year Historical Share Price Ingenia Lifestyle 10 Year Historical Share Price

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A summary of the major investors in the Australian MHE market is provided below:

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US MARKET SNAPSHOT

The US MHE market is considered to be a mature asset class which appeals to a multitude of institutional and private investors. There are approximately 8.8 million manufactured homes nationwide, representing circa 10% of the nation’s housing stock.

The breakdown of the US retirement living market by size is detailed within the below chart, demonstrating significant demand for MHE communities in comparison to retirement villages.

Source: Citibank

The two largest listed operators in the US are Equity Lifestyle Properties (NYSE; ELS; Market Cap $10.2b) and Sun Communities, Inc (NYSE:SUI; Market Cap: $10.1b). ELS and SUI have outperformed and traded at tighter cap rates than Apartment REITs in the public markets over the last 10 years, with analysts expecting growth in the MHE sector to outpace the broader REIT market in 2019 and beyond. The table below compares annualised MHE listed returns vs apartment market returns.

Annualised Returns ELS SUI Apartments

1 Year 31.9% 32.8% 12.5%

5 Year 25.4% 24.6% 11.9%

10 Year 16.9% 23.9% 10.8%

Source: Citibank

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Improved macroeconomic conditions have assisted with increasing industry demand over the past five years, illustrating a similar, albeit more advanced narrative to the Australian market. The need for affordable housing and an ageing population has played a major role in sector growth.

The US Federal National Mortgage Association, Fannie Mae and the Federal Home Loan Mortgage Corporation, Freddie Mac are exploring ways to support chattel loans and the implications for the MHE sector could be significantly positive.

With regards to an improving market, sector cap rates for prime MHE assets have progressively compressed from ~9.5% at their peak in 2009 to ~4.7% in December 2017. The chart below details trends in US MHE cap rates vs the US apartment market and REIT sectors since 1998:

Apartment MH REIT Sectors

As at Dec-17 5.1% 4.7% 5.6%

1 Year Average 5.0% 4.9% 5.6%

5 Year Average 5.3% 5.8% 5.6%

10 Year Average 5.8% 6.7% 6.3%

Source: Citibank

The abovementioned cap rates and market trends, further demonstrate the relative value that the Australian MHE market commands as a maturing market in comparison with the US. At present cap rates in the Australian market for prime MHE stock range from 6.5%-7.5%.

INVESTMENT MARKET

The appetite from institutional capital to gain exposure and scale within Australia’s MHE market has been increasing in recent times as the market matures.

A number of significant transactions have taken place within the last 12 months, including the Singaporean investor, GIC acquiring the private equity backed National Lifestyle Villages for $200m, and most recently the US operator Hometown acquiring the previously ASX listed Gateway Lifestyle Communities for approximately $680m.

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In terms of existing individual MHE land transactions, there have been over twenty reported transactions since 2016 across Australia. Yields typically range between 6.5%-8.0%, with rates per dwelling site ranging from $30,000 - $130,000 depending on the quality of the product and location.

A summary of some recent key sales is detailed below:

Property Sale Price Sale Date Purchaser Number of Sites

Analysis

Burpengary, QLD Lake Macquarie, NSW & Chain Valley Bay, NSW

$57.0m Feb-18 Hometown Australia

578 $98,616 per dwelling site

Hometown has purchased 148 homes from Ingenia at Lake Macquarie and Chain Valley Bay, and a further 430 sites from Wattle Villages in Burpengary. The two Ingenia properties have had extensive recent redevelopment works and are close to Sydney and Newcastle.

Durack Gardens Caravan Park, 785 Blunder Road, Durack, QLD

$25.0m Jun-17 Ingenia Current: 253

Dev: 49

Total 302

$98,814 per dwelling site (existing)

$82,781 per dwelling site (total)

Ingenia has acquired the property comprising 113 park owned rental homes, 132 permanent homes and 8 tourism sites. Ingenia plans to build another 49 homes on the 9.5 ha site.

Cairns Coconut Holiday Resort

$50.0m Feb-17 Ingenia Current: 360

Dev: 34

Total: 394

$138,889 per dwelling site (existing)

$126,904 per dwelling site (total)

An off-market transaction of a 11 hectare tourist destination on an initial yield of more than 8%. The park includes 325 tourism sites and 35 long term homes. The tourism component comprises 118 cabins and 207 sites with the potential to add a further 34 tourist cabins with development approval in place.

Avina Van Village, 217 Commercial Road, Vineyard

$33.0m Sep-16 Ingenia Current: 180

Dev: 150

Total: 330

$183,333 per dwelling site (existing)

$100,000 per dwelling site (total)

Avina Van Village is one of the last family owned freehold caravan parks in Sydney and added 180 income producing sites to Ingenia’s holdings, with the potential to develop approx. 150 new homes on land acquired within the existing community.

Lake Macquarie, NSW

$14.5m Mar-16 Gateway Lifestyle

180 $80,556 per dwelling site

Forms part of a $49.3m deal for the MHE sites that includes four in NSW, with one apiece in Queensland and Victoria. Lake Macquarie comprises 180 homes that are 100% occupied.

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3 THE OPERATOR: VIVACITY Vivacity has recently been established by an experienced executive team that averages over 10 years of direct experience as owners, operators and developers within the MHE community and residential sector. Vivacity’s executives have delivered over 10,000 residential and MHE community dwellings. Vivacity prides itself on developing and operating MHEs that provide safe, friendly and interactive lifestyle communities for independent over 50s in highly desirable retirement locations. Since inception, Vivacity has secured over 1,000 high quality development home sites in A-grade retirement locations, with a focus on larger metropolitan or lifestyle based sites that provide long term operating efficiencies and value for investors.

The Vivacity business has the following competitive advantages:

- experienced executive team;

- access to a variety of attractive investment opportunities, in particular off market deals, leveraging off industry contacts and experience;

- over 1,000 sites (dwellings) secured and further sites identified as potential development pipeline;

- established systems and processes for operating MHEs to deliver efficient operating budgets;

- ability to tender works to experienced industry contacts with the outcome of minimizing costs throughout the development process; and

- no conflicts of interest with RF CorVal funds when sourcing opportunities.

KEY TEAM MEMBERS

Jonathon Steggles Mendez – Executive Director

Jonathon is a Director of Vivacity Property with over 10 years’ experience in the property industry, specialising in the land lease communities sector. Prior to founding Vivacity Property, Jonathon was Head of Acquisitions for a top 200 ASX listed company. During this time, over $100 million in acquisitions were successfully completed. Jonathon oversaw all aspects of each project including; site selection, feasibility assessments, funding and reporting. Within the Vivacity business, Jonathon is responsible for strategic decisions, business development, the organisation’s operations and ongoing management.

Jonathon has a diverse background having held various positions in acquisitions and divestment of real estate assets, and various roles consulting in the construction, automotive, commodity exchange and forfaiting sectors in Germany. Jonathon has acted as Director for Henny Penny Holdings where he successfully mediated between two parties and led the sell down of the real estate portfolio. Jonathon also oversaw the development portfolio for an Australian residential property developer including both direct investments and managing joint venture relationships along the Australian Eastern Seaboard. During Jonathon’s time in Germany he developed significant relationships with German fund managers, playing a key role in the acquisition of a number of real estate investments.

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John Rowley – Development Director

John is the Development Director at Vivacity and has a long track record in the property development industry with over 25 years in the successful delivery of high-quality development projects through strong management and planning techniques. Prior to joining Vivacity, John spent over 10 years completing large-scale development projects in Sydney’s growth corridors, including the new suburb of Gregory Hills, the adjoining Central Hills Business Park and all the infrastructure for the award-winning Narellan Town Centre expansion project.

John then moved on to specialise in the development of senior’s living sites under the land lease model where he had responsibility for project performance across the delivery cycle including acquisition coordination, establishment of sales and marketing strategy, delivery management and reporting in a listed environment. Within the Vivacity business, John is responsible for all aspects of the delivery of new projects including planning, construction, sales and marketing and the operation of the communities.

Tom Copping – Senior Planner

Tom is the Senior Planner at Vivacity and has over 10 years’ experience working in a variety of planning roles from private developers to state government and local council. Tom has successfully managed and delivered a number of major rezoning’s and development approvals in metropolitan Sydney for Dyldam Developments, where he specialised in high-rise mixed-use development projects with capital investment values ranging from $20 million to $500 million.

Tom has an in-depth working knowledge of the land lease industry, having delivered a number of development approvals for Land Lease Communities across NSW, QLD and VIC. Within the Vivacity business, Tom is responsible for managing the rezoning/development approvals process and provides detailed planning advice from site acquisition to the construction phase.

ALIGNMENT OF INTEREST - Vivacity will be an investor in the Fund for between $2m -$3 m of the Fund’s equity.

- No up-front fees will be charged by Vivacity to the Fund, aside from arms-length development management and property management fees, with any economic returns “back ended” and being dependent upon firstly, Fund investors being repaid an amount equal to their initial equity invested into the Fund, and secondly, the future success of the respective MHE communities.

- Vivacity will, at its own cost, be responsible for the hiring of all staff and all head office and administrative costs. It is not until that point in time that Fund investors have been repaid an amount equal to their initial equity that Vivacity will then share in the Fund returns. Project specific costs will be on-charged to each respective MHE project.

- Both RF CorVal (acting on behalf of Fund investors) and Vivacity will have equal representation on the Investment Committee for the Fund, thereby ensuring the Fund only invests into projects which both RF CorVal and Vivacity agree are in the best interests of the Fund and its investors.

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4 ABOUT THE FUND OBJECTIVES AND STRATEGY

The Fund’s objective is to provide investors with exposure to the MHE property sector. The Fund intends to pursue a “develop to own” strategy, forecasting total pre-tax returns of 15-20% per annum, with the ultimate objective of owning and operating a portfolio of quality MHE properties, providing Australia’s ageing population with attractive, affordable accommodation. It is expected that returns will be generated both from potential development profits, as well as the long-term secure cash flow and value that is forecast from the stabilised estates.

The investment strategy is to:

- acquire development sites in appropriate locations for retirement living (eg. coastal communities / fringe or outer suburbs of metropolitan areas);

- structure acquisitions to minimize planning risk by entering into options with vendors, with final settlement of the land subject to securing appropriate zoning or acquiring sites that have already secured the necessary approvals;

- develop the estates, including undertaking the required infrastructure works, community facilities, display villages and marketing and selling the dwellings through appropriate agencies and networks;

- operate the completed estates to maximise long-term income and value;

- acquire existing, operational MHEs which offer the potential for further development and where the returns are considered appropriate for the Fund; and

- leverage off the expertise of the Fund’s operating partner, Vivacity, which has extensive experience in the sourcing, development, marketing and operation of MHEs.

The acquisition and development of the estates will be funded with an appropriate mix of debt and equity, generally employing gearing at 50-55% with any debt to be secured against the assets of the Fund and non-recourse to investors.

RF CorVal has received indicative terms from a major Australian bank to provide loan funding to the MHE Co-venture that would be secured against the underlying property investments of the Fund. Any debt facility does however remain subject to obtaining formal bank credit approval. The indicative returns presented in this IM are predicated on the basis that debt can be obtained on terms similar to this indicative term sheet.

Debt funding will initially be used to partially fund the development of new MHE communities, and upon an agreed level of sales to individual residents being reached, be converted to a term-loan investment facility to be serviced out of the net rental income being generated from the respective MHE community.

The Fund has a long-term investment horizon, pursuing a “develop to own” strategy, with liquidity limited to a 5-yearly Liquidity Facility as set out in Fund Terms below. However, given the development nature of the investments, it is expected that investors will receive a significant return of capital at the time that the developments are stabilised and become fully operational and income producing. The indicative cash flows from prospective investments, together with the bank loan funding terms, have been included in preparing the indicative cash flows and returns as presented in Section 5.

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There may however be alternative exit options, once the portfolio of estates has been developed and is fully operational, including the potential sale of the Fund’s interest in the portfolio of MHE assets to institutional investors or a public listing. Once the Fund has achieved sufficient scale, RF CorVal expects that a portfolio of high quality MHE properties will have broad investor appeal given the secure long-term income streams from the completed estates and the strong underlying drivers that further support this property sector.

STRUCTURE

The Fund will be established as a stapled structure, given that it will undertake development as well as passive investment activity. Investors will therefore be issued with units in the RF CorVal MHE Land Trust and the RF CorVal MHE Operator Trust, collectively the Fund, with the units to be stapled together pursuant to a formal stapling deed.

The RF CorVal MHE Land Trust will then own all of the Class A units in the MHE Co-venture Land Trust and the RF CorVal Operator Trust will own all of the Class A units in the MHE Co-venture Operator Trust, collectively the MHE Co-venture Fund, with the Class B units to be owned by the Fund’s operating partner, Vivacity (or nominee). The MHE Co-venture Fund will acquire the underlying estates through separate sub-trusts as illustrated in the chart below:

The entities comprising the Fund and those comprising the MHE Co-venture Fund will be unlisted, unregistered, wholesale managed investment schemes. The trustees of the Fund entities will be RF CorVal group entities and the trustees of the MHE Co-venture Fund entities and each of the underlying sub-trusts that will acquire the estates will be entities that will be owned 50% by RF CorVal and 50% by Vivacity.

The role of the trustee of the various trusts will be to:

- hold the assets of that trust;

- borrow funds on behalf of that trust;

- provide asset management, funds management and administration services to that trust.

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FUND DOCUMENTS

Below is a summary of the suite of project documents proposed to be entered into in relation to the joint venture arrangement with Vivacity.

CO-VENTURE TRUST CONSTITUTIONS

There will be separate constitutions, on substantially the same form, establishing each of the MHE co-venture trusts, being the MHE Co-venture Land Trust and MHE Co-venture Operator Trust as well as the special purpose sub-trusts for each underlying estate (MHE Co-venture Group).

The constitutions for each of the trusts in the MHE Co-venture Group will, among other things, govern the processes for the issue of units, the transfer of units, distributions of profit to unitholders, trust accounting and meetings of members (including voting and decision-making rights). The constitutions will also permit stapling under the Stapling Deed (as summarised below).

STAPLING DEEDS

The MHE Co-venture Fund will be established as a stapled structure. Units in the MHE Co-venture Land Trust will be stapled to units in the MHE Co-venture Operator Trust in accordance with a Stapling Deed between those two entities. Similarly, units in SPV land sub-trusts and operating sub-trusts will be stapled in accordance with stapling deeds between the relevant special purpose entities on an estate by estate basis. The purpose of the Stapling Deeds is to set out the terms and conditions governing the relationship between the stapled trusts in respect of the stapled securities referred to above, including that units in one stapled trust can only be traded together with units in the other stapled trust. This deed will also expressly permit loans across the staple.

CO-VENTURE AGREEMENT

The purpose of the Co-Venture Agreement (CVA) is to set out the terms and objectives of the co-venture between the Fund and Vivacity in respect of the acquisition, development and eventual operation of manufactured housing estates (MHE Co-venture). In particular it is intended to govern:

- the processes for sourcing and acquiring sites for future manufactured home estate projects (Projects), including the rights the parties have to participate in new projects and the obligations they have to present new opportunities to the MHE Co-venture;

- the obligations for funding the acquisition and development of Projects;

- the sharing of profits (and losses) from Projects;

- decision-making with respect to the operation of the MHE Co-venture;

- the parties’ rights to deal with their interest in the MHE Co-venture Fund; and

- the removal of Vivacity as operator in the case of ‘non-performance’.

The CVA will operate in part as a unitholder agreement with respect to the units each of the Fund and Vivacity hold in MHE Co-venture Fund.

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DEVELOPMENT MANAGEMENT AGREEMENT

The purpose of the Development Management Agreement is to appoint the Development Manager (that will be an entity within the Vivacity group) to perform the development management services in connection with the relevant Project. A separate Development Management Agreement on substantially similar terms will be entered into for each estate/Project (between the Development Manager and the relevant special purpose trust(s)).

The Development Management Agreement will set out the responsibilities of the Development Manager for the total management and co-ordination of the development of Projects.

Broadly the Development Manager’s role will include responsibility for maximising development potential for the relevant project, procuring the sale of manufactured homes and the leasing of residential sites, directing the performance of contractors, putting in place insurances, obtaining approvals, assisting with debt funding procurement, maximising commercial outcomes and reporting to the relevant member of the MHE Co-venture Group. The Development Manager will be paid a fee in return for its performance of the development management services, with details of the fees set out in the “Joint Venture Arrangements” section to follow.

MANAGEMENT SERVICES AGREEMENT

The purpose of the Management Services Agreement is to appoint the Estate Manager (that will be an entity within the Vivacity group) to perform management services in relation to completed Projects. A separate Management Services Agreement on substantially similar terms will be entered into for each estate (between the Estate Manager and the relevant special purpose trust(s)).

The Management Services Agreement sets out the responsibilities of the Estate Manager to provide management support services once the development of the Projects has been completed.

Broadly, the estate manager will be responsible for ensuring that the developed projects are properly resourced and professionally managed, including providing appropriate financial and operational reporting to the relevant member of the MHE Co-venture Group. The Estate Manager will be paid a fee in return for its performance of the estate management services, with details of the fees set out in the “Joint Venture Arrangements” section to follow.

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JOINT VENTURE ARRANGEMENTS

Vivacity will be the operating partner of the MHE Co-ventre Fund and will have primary responsibility for the sourcing and acquisition of sites, securing the necessary planning approvals, development of the estates, marketing and selling the dwellings, as well as the ongoing operation of the MHEs. This responsibility is documented in the management agreements and the CVA.

Vivacity, or a nominee will hold a 50% interest in the MHE Co-venture Fund, with this interest to be held by way of “B-class” securities. These “B-class” securities will entitle Vivacity to 50% of all future cash flows of the MHE Co-venture Fund once an amount equal to all of the equity that the Fund has provided to the MHE Co-venture Fund has been distributed. It is currently intended that Vivacity and the Fund contribute 50% ech of operating costs (once Projects are complete and estates are operational).

Vivacity will be responsible for:

- the day to day running of the respective projects and completed MHE estates;

- providing the required development management services to any MHE development project;

- the employment of all staff required to run and operate the joint venture from the MHE operational side, with the relevant MHE Co-venture Group entity responsible for the costs of all operating staff as they relate to that respective project;

- procurement of the required technology and other software applications to maximise the performance of the respective projects and completed MHE estates; and

- the provision of the office accommodation and other operational costs as they relate to the Vivacity business.

Vivacity will earn a development management fee of 3% of development costs (excluding land costs) during the development period for each project and, once operational, Vivacity will earn an on-going estate management fee at market rates, for its role as the estate manager/operator of the completed MHEs. This fee will be determined on a sliding scale dependent on the size of the estate and will typically be $60,000-$180,000 per annum per MHE, representing 3-6% of gross rental income.

The CVA will be entered into between the Fund, Vivacity and the trustees of the Co-venture Fund that will govern the relationship, including providing for entry into the various management agreements with Vivacity entities. Under the CVA, each party will have a first right of refusal over the others interest in the MHE Co-venture Fund should either party wish to sell its interest to a third party on terms no more favourable to a purchaser than those offered to the non-selling party.

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INVESTMENT COMMITTEE

The CVA will also provide for the establishment of an Investment Committee, which will be responsible for the overall management of the MHE Co-venture Fund, including:

- the assessment and approval of any new investments;

- the approval of business plans and annual budgets;

- approving debt funding;

- considering and approving exit opportunities at a project and portfolio level.

The Investment Committee will comprise of two representatives from RF Corval and two representatives from Vivacity. The RF Corval representatives will be a member of the senior management team and an independent expert, Bruce Carter.

Bruce co-founded Lifestyle Communities Limited (LIC), an over 55’s land lease community developer and operator, which was established in 2003 and was listed on the ASX in 2007. LIC was a pioneer of the industry in Victoria and is now the leading provider of MHE accommodation in the state. Bruce was appointed as an executive Director in September 2007 and transitioned to non-executive Director on 1 July 2015. Bruce was also a member of the Audit Committee and retired from the board in 2017.

Bruce has more than 30 years’ experience in financial and business management. He was also the co-founder of Australian Stock Exchange listed telecommunications company Pracom Limited, serving as joint Managing Director from 1988 to 2002. Bruce has a B.Com from the University of Melbourne and has extensive knowledge and experience of building, funding and operating complex companies in a variety of industries.

RF Corval believes that having Bruce on the Investment Committee will be extremely beneficial to investors, leveraging off his extensive experience in the industry to offer independent, expert advice and oversight of the Fund’s investment and operational strategy.

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FUND TERMS

Targeted Equity* $20m-$30m

Estimated Closing Date 5 July 2019

Fund Structure As the Fund will be undertaking both development activity and passive investment activity, it will be structured as an operating trust and a land holding trust, with investors to be issued stapled Security Interests in both trusts.

Nature of Fund and Security Interests

Unlisted, unregistered wholesale managed investment scheme with investors to be issued partly paid Stapled Security Interests in the Fund at $1.00. Where it is necessary to re-allocate capital between trusts, there will be the ability for one trust to make a return of capital to investors with that return of capital compulsorily applied as a contribution of capital into the other trust.

Investment Period Two years from the Closing Date, with the Equity to be progressively called or committed over this period. Any net proceeds the Fund receives from development activity may be reinvested or committed during the Investment Period.

Term and Liquidity The Fund does not have a fixed term. Investors should view this as a long-term investment of at least seven to ten years, however investors will be offered liquidity windows on 30 June 2024 and every five years thereafter, provided sufficient liquidity is available within the Fund (Liquidity Facility). Redemptions will be priced based on the net asset value (NAV) of the Fund at the relevant date, adjusted for notional selling costs. The Fund will endeavour to satisfy any withdrawal request from available funds as soon as practical. Available funds may include surplus cash, or funds from increasing debt facilities up to the Fund’s target gearing level of 55%. If withdrawal requests are received from investors representing more than 50% of the equity in the Fund, RF CorVal will seek to dispose of the Fund’s investment in the MHE Co-venture in an orderly manner and return the capital to all investors. At other times, RF CorVal will offer to match investors wishing to exit the Fund with prospective new investors, where possible. As the Fund intends to develop a portfolio of high quality MHE assets, there may be an opportunity in the future, once sufficient scale has been achieved, for the Fund to sell 100% of its interest in the portfolio, including to an institutional investor, or via a public listing, given the appeal of the long-term secure income stream offered by the completed estates.

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Undertaking No investor may own 50% or more of the Security Interests in the Fund.

Reporting Investors will be provided with six-monthly updates on the operations of the Fund, audited annual financial reports and tax statements and quarterly distribution statements (once the estates become operation and the Fund is generating net operating income)

Valuations The Fund’s properties will be re-valued as at 30 June of each year in order to determine the Fund’s NAV, which will also account for any implied performance fee and tax.

Alignment of Interests It is intended that the directors, senior management, shareholders and other related entities of RF CorVal will subscribe for a minimum of 10% of the Fund’s Equity. Vivacity will subscribe for between $2m - $3 m of the Fund’s Equity

* RF CorVal retains the discretion to close the Fund with a greater or lesser amount than the targeted Equity amount

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5 FUND INVESTMENTS INVESTMENT AND MANAGEMENT PROCESS

Vivacity has the primary responsibility for sourcing MHE investment opportunities, with a primary focus on targeting locations that are attractive to retirees, based on a macroeconomic assessment. Once identified, Vivacity will then complete an initial assessment and present appropriate opportunities to the Investment Committee for approval to proceed to due diligence.

A summary of key investment criteria for potential acquisitions is detailed below:

Criteria Description

Ageing Population Locations that have a high number of retirees and aged population

Affordability Pricing and affordability is key, both in relation to competing retirement villages and median sale price of houses in the surrounding area

Limited Competition Source development sites with limited competition from other MHE operators

Proximity to Amenity Proximity to amenity i.e. retail amenity, transport, hospitals and leisure centres or recreational facilities (eg. golf courses, beaches, lakes, etc)

Vivacity, in conjunction with RF CorVal, will appoint consultants and undertake due diligence which will include, but not be limited to:

- Commissioning market research and demographic reports to understand the demand/supply dynamics, which will drive the key assumptions, including forecast sales rates and pricing;

- Inspection of the properties;

- Appointing independent consultants, including geotechnical and civil engineers, planning consultants, quantity surveyors and valuers;

- Appointing legal advisers and finalise legal due diligence and documentation;

- Preparing detailed financial forecasts reflecting the finding of the due diligence.

On completion of due diligence, a final report and recommendation will then be presented to the Investment Committee and unanimous approval will be required prior to the MHE Co-venture Fund entering into the investment. Investments will be structured to limit zoning risk by entering into options and deferred settlement arrangement so that the land purchase typically does not occur until rezoning and development approvals have been secured.

Once the MHE Co-venture Fund has acquired the property, Vivacity will then be responsible for implementing the approved business plan, including obtaining the necessary planning approvals, development of the estate, marketing and selling the dwellings, as well as the ongoing operation of the MHE. Vivacity will report regularly to the Investment Committee, including providing monthly budget-to-actual cash flows and variance analysis, sales and operational updates and annual budgets.

RF CorVal will be responsible for overseeing the acquisition of new investments and development and ongoing operation of the estates, securing and managing the debt facilities, investor reporting, accounting, tax and all other compliance aspects of the Fund, MHE Co-venture Fund and the underlying sub-trusts and acting as the trustee for the Fund.

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PIPELINE

RF CorVal and Vivacity have identified a number of potential initial investments for the MHE Co-venture Fund, through our collective network of agents and owners. The table below provides a high-level summary of the pipeline of prospective investment opportunities, noting that some of these have been secured under options:

Address Deal Status Description

NSW Central Coast Secured under option arrangement

Unzoned site with potential for circa 180 dwellings. Further detail on this opportunity is presented in the Indicative Investment section below.

NSW South Coast Secured the site under an option arrangement

12 hectare leasehold lot that may be developed for 110 dwellings, with the option to a further increase in density, subject to additional design and approvals. Development is subject to rezoning and obtaining development approval.

NSW Central Coast Secured the site under an option agreement

Development approval for circa 215 permanent dwellings.

INDICATIVE INVESTMENT

This section provides an indicative example of the type of investment the Fund intends to pursue.

Whilst RF CorVal and Vivacity have secured this particular asset by way of an option, the information presented below is for illustrative purposes only as this investment remains subject to completion of due diligence and, assuming the Fund is established, approval by the Investment Committee.

RF CorVal and Vivacity have sourced an off-market opportunity and have the right to acquire a site on the NSW Central Coast (Property), under an option arrangement. The Property is a 100% freehold interest in a 9.5ha development site that is subject to rezoning and development approval. The intention is to seek to obtain approval for a MHE community of approximately 179 dwellings.

The Property is located approximately 30 minutes north of the Wyong Town Centre, a 90 minute-drive to the Sydney CBD and 45 minutes from the Newcastle Airport. It also benefits from its proximity to Lake Macquarie (approx. 1km) and is adjacent to an existing MHE community which is fully developed and sold, thereby confirming the appeal of this location to retirees.

The Property is currently zoned E3 Environmental Management and the intention is to obtain a rezoning to RE2 private recreation, to allow the development of the proposed MHE. It is anticipated the rezoning application will be well received by council given the surrounding uses comprise low density residential and another existing MHE property and the site has been identified in Council’s strategic plan as a land to be released for residential development.

In order to minimize rezoning risk, an option has been entered into with the existing owner, with settlement of the land subject to obtaining rezoning and development approval. A planning proposal is expected to be lodged for the rezoning of the site in 2019, and it is expected that the rezoning will go to a Gateway Determination process with the rezoning anticipated in 2020.

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The phases and indicative timing and costs associated with the development of the Property are summarised below and this will be typical for the types of developments that the MHE Co-venture Fund intends to pursue.

Phase 1: Planning

- secured the site under an option agreement and paid the option fee

- obtain rezoning, expected in 2020

- obtain development approval, expected by late 2020

- settle the land in 2021

- over this period all costs will be equity funded with the exception of the land purchase, which will be funded through a combination of debt and equity

Phase 2: Construction

- undertake construction to provide the utilities, roads and other infrastructure for the estate as well as the community centre, swimming pool and other facilities for the residents, along with construction of a display village, to assist with marketing of the estate

- construction is phased, with timing dependent on the timing of the sale of the dwellings – for this Property it is assumed to be completed in five stages commencing in 2021, with the final stage assumed to be completed by early 2024

- over this period costs will be funded through a combination of debt, equity and the net proceeds from the sale of the dwellings

Phase 3: Sales

- market the estate, with sales expected to commence in 2022 and indicatively assumed to occur at the rate of 4 sales per month at a sales price of $435,000 (inclusive of GST)

- net sales proceeds to be employed to repay the development debt facility or return equity to the Fund

Phase 4: Stabilisation

- once 75% of the homes have been sold (assumed to be by late - 2024), an investment debt facility is assumed to be introduced at 50% of the completion value of the estate, with the debt proceeds used to repay equity invested in the MHE Co-venture Fund

- from this date the estate is effectively fully operational and generating positive net operating income through the site rental, which is assumed to be $185 (current rate) per week per home. From this gross rental income operational costs are deducted, which are indicatively 30% of gross rental income

- the sale of the remaining 25% of the homes will continue to generate additional positive cash flow which is also available to be repaid to the MHE Co-venture Fund

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INDICATIVE EQUITY CASH FLOWS AND RETURNS

The table below shows the indicative timing and nature of the cash flows to equity investors for the Property over an assumed 12-year investment period, with a notional sale at the end of this period:

* cash flows adjusting for Fund's 50% share of tax paid by the investment vehicles^ net cash flows to the Fund after any tax paid by the investment vehicles (see section 8)

The indicative equity cash flows require initial equity contributions over the first 3-5 years to fund the planning costs, land acquisition, initial construction costs and tax. Subsequent construction costs are expected to be funded by debt and the net proceeds from the sale of the dwellings. From 2024 onwards, it has been assumed the Property will reach stabilization (75% of dwellings sold), with the sites to be generating weekly rental income. At this point, an investment debt facility is assumed to be introduced which enables the repayment of the initial equity. The remaining 25% of the dwellings are assumed to be sold over the course of 2025, releasing further development profit to the investors.

Thereafter the estate is fully income producing and net operating income is paid to investors over this period. Finally, the table above shows the notional disposal of the Property in 2031, with net sales proceeds returned to the investors and the resultant overall indicative returns to Fund investors.

A notional disposal of the Property has been assumed for the purpose of illustrating what the indicative equity IRR may be should the Property be sold in 2031. As the Fund has a ‘develop to hold’ strategy, there can be no certainty as to when MHE properties may eventually be realised.

Financial Year Ended Contributions Distributions

Cumulative Net Equity Contributions Distributions

Cumulative Net Equity

Jun 2020 (1.4) - (1.4) (1.4) - (1.4) Jun 2021 (9.0) - (10.4) (9.0) - (10.4) Jun 2022 (3.1) 0.2 (13.3) (3.1) - (13.5) Jun 2023 (2.0) 0.9 (14.4) (2.0) - (15.5) Jun 2024 (1.7) 15.8 (0.3) (1.7) 14.9 (2.4) Jun 2025 - 5.1 4.8 - 4.0 1.7 Jun 2026 - 1.4 6.2 - 1.1 2.7 Jun 2027 - 0.3 6.4 - 0.2 3.0 Jun 2028 - 0.3 6.7 - 0.2 3.2 Jun 2029 - 0.3 7.0 - 0.3 3.5 Jun 2030 - 0.3 7.4 - 0.3 3.8 Jun 2031 - 6.4 13.8 - 6.4 10.2 Total (17.2) 31.1 (15.4) 27.4

Indicative equity IRR 16.0% 11.5%Indicative equity multiple 1.8 1.6

Equity Cash Flows (pre tax*) Equity Cash Flows (after tax^)$m $m

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KEY ASSUMPTIONS

The key assumptions that have been adopted in these indicative cash flows for the Property are summarised below:

Number of dwellings 179

Sales price per dwelling (inclusive of GST) $435,000

Construction cost per dwelling $185,000

Number of dwelling sales per month 4

Weekly rent per site (current rates) $185

Operating margin (% of weekly rent) 70.0%

Indicative level of investment facility (once stabilized) 55.0%

Exit cap rate 7.0%

Note: The rates above are in current dollars, which have been inflated over the investment period

INDICATIVE DEVELOPMENT PROFIT

Adopting the key assumptions above, the indicative development profit for this Property investment, before Fund level fees, costs and tax is summarized below:

$m

Net proceeds on sale of dwellings 73.0

Fund’s 50% share of completed value of the MHE 10.3

Indicative Revenue/Value 83.3

Land price 7.5

Acquisition costs 1.4

Planning and consultant costs 0.7

Construction costs – community facilities 4.8

Infrastructure costs and contributions 13.2

Construction cost of dwellings 39.3

Development management fees 1.7

Marketing costs 1.7

Land holding and other costs 1.0

GST recoveries (5.6)

Contingency 2.7

Interest expense 1.7

Indicative Costs 70.0

Indicative Profit 13.3

Indicative Profit on costs 18.9%

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SENSITIVITY ANALYSIS

The following sensitivity analysis has been undertaken illustrating the impact of changes in key assumptions on the projected returns to the Fund, on a pre-tax basis.

- Sales Price (ie. assumed sales price of each home, inclusive of GST) vs Sales Velocity (ie. assumednumber of homes sold per month)

- Sales Price vs Exit Cap Rate (ie. the cap rate adopted to determine the value of the completed, fullyoperational estate, with the cap rate applied to the net income of the complete estate, being thetotal rental revenue less the costs of operating the estate)

- Sales Velocity vs Exit Cap Rate

Sales Price vs Sales Velocity Price per unit 2 sales per month 4 sales per month 6 sales per month

$400,000 8.3% 12.4% 15.3% $425,000 10.5% 16.0% 20.1% $450,000 12.5% 19.4% 24.9%

Sales Price vs Exit Cap Rate Price per unit 8.0% 7.0% 6.0%

$400,000 11.2% 12.4% 13.9% $425,000 14.9% 16.0% 17.4% $450,000 18.4% 19.4% 20.7%

Sales Velocity vs Exit Cap Rate Sales per month 8.0% 7.0% 6.0%

2 9.7% 10.5% 11.5% 4 14.9% 16.0% 17.4% 6 18.8% 20.1% 21.7%

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6 RF CORVAL

RF CorVal is a specialist property fund manager and investor whose executives and shareholders have a long and deep history in the Australian property industry. RF CorVal has acquired in excess of $2 billion of real estate on behalf of institutional, high net worth individuals, overseas and retail investors.

Our objective is to provide investors with access to Australian real estate opportunities that deliver strong risk-adjusted returns, by investing in single strategy investment vehicles that offer complete transparency, an absolute focus on performance and a strong alignment of interests.

Our aim is to deliver real estate investment solutions for institutional, wholesale and retail investors through the establishment of tailored unlisted property investment vehicles including joint ventures, clubs and funds.

We are licensed by ASIC, with a focused business model designed to:

- develop unlisted property funds, housing quality property assets;

- deliver attractive risk-adjusted returns to our investors;

- ensure an absolute focus on performance;

- place the interests of our investors first; and

- maintain material alignment of interests by co-investing alongside our investors where possible.

The business is owned by the senior executive management team and the major shareholder, Andrew Roberts, who is the eldest of three siblings within the Roberts family, who held a beneficial interest in the ASX-listed Multiplex Group, prior to its takeover by the North-American based Brookfield Asset Management. As part of this takeover, the Roberts family interest was sold for approximately $1.1 billion.

The RF CorVal business has a number of key competitive advantages, including:

- access to attractive investment opportunities by leveraging off the historic experience and market position of our stakeholders;

- the ability to move quickly to acquire property assets, through access to the financial strength of our major shareholder;

- no conflicts of interest when sourcing opportunities as RF CorVal does not operate funds with competing investment strategies;

- a disciplined business model that is focused upon performance, rather than growing or maintaining funds under management;

- an emphasis on recycling investor capital, by aiming to sell property assets when considered most appropriate to do so; and

- the capacity to create unlisted investment vehicles that respond to the property investment preferences of our investors.

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OUR INVESTMENT APPROACH

RF CorVal develops investment vehicles in partnership with investors that are designed to meet their specific requirements. The over-riding objective is to provide investors with vehicles that pursue a strategy aimed at meeting investors’ risk-return profile within a structure that offers transparency and a strong alignment of interest.

As both investment manager and co-investor, we employ a disciplined approach to real estate investing that is focused on understanding and evaluating investment risk. A detailed knowledge of the markets, and an understanding of the property fundamentals that drive long term value, enable risks to be quantified.

Based on this assessment, we are well positioned to make investments that deliver an appropriate risk-adjusted return. Each investment is assessed from a macro perspective with a focus on economic fundamentals including interest rates, inflation and capital flows as well as the micro factors including local market supply and demand and the property specifications.

In assessing each investment opportunity and determining the appropriate strategy, RF CorVal addresses the following key areas:

- entry price and timing;

- strategy, including opportunities to add value through active management;

- growth potential, driven by real estate fundamentals;

- risks and mitigating factors;

- hold period/exit strategy;

- funding; and

- sustainability and responsible investing.

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OUR DIRECTORS

Kevin Neville – Non-Executive Chairman

Kevin is the previous Managing Partner of Moore Stephens, Accountants and Advisors, in Melbourne and former Chairman of Moore Stephens Australasia. Kevin has over 30 years of professional accountancy experience and has been an audit partner with Moore Stephens since 1985.

Rob Rayner – Executive Director

Rob is the Chief Executive Officer of RF CorVal and has over 27 years’ experience in the Australian financial services and property industry. Rob has a wide-ranging background in the property funds management industry, and has been involved with the re-structuring, establishment and on-going management of over $3 billion in funds, through senior positions held with Armstrong Jones (prior to being acquired by ING Real Estate) and Brookfield Multiplex.

Rob was also responsible for the successful establishment of the Acumen Capital funds management business in 2000 prior to its acquisition by the Multiplex Group in 2003 to form that group’s funds management platform. Within the RF CorVal business, Rob is responsible for the creation and marketing of new funds, together with the ongoing management and investor communications for these funds.

George Kostas – Executive Director

George is the Chief Executive Officer of RF Capital, the family office of Andrew Roberts, our major shareholder. In his role as group chief executive officer of RF Capital, George is responsible for all investments undertaken by the Roberts Family Office and the operational performance of the various businesses it owns. That includes alternative asset management company RF Capital, Roberts Constructions and Australian construction company Roberts Pizzarotti. Prior to this, George was chief executive of the largest privately held property group in the Middle East North Africa (MENA) region, the US$10 billion Majid Al Futtaim Properties.

Originally qualifying as a chartered accountant, George started his career with Bob Ell's Leda Holdings before spending fourteen years with Brookfield Multiplex. During his time at Multiplex, George held a number of executive roles, including head of capital finance and treasury; head of strategy, mergers and acquisitions; deputy CFO; and managing director of the Australian residential business. George completed his tenure with Brookfield Multiplex in 2013 as a member of the global executive team and managing director of the construction and development arm in the Australasian region.

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7 RISK FACTORS Like any investment, there are risks associated with investing in the Fund. By their very nature, the risks involved with property investments cannot be exhaustively categorised. There are a number of risk factors that could affect the performance of the Fund, the level of income distributions and the repayment of your capital. Many risk factors fall outside the control of the Trustee and cannot be completely mitigated.

The risks of investing in the Fund include general investment risks including economic and market conditions and risks which would apply if you were purchasing the proposed investment properties in their own right and those that are specific to investing in the Fund.

The following is a non-exhaustive list of the main risks associated with investment in the Fund. You should consider and weigh them up carefully and make your own assessment as to whether you are comfortable with them.

The projected performance of the Fund, any income distributions and the return of your capital are not guaranteed.

GENERAL INVESTMENT RISKS

These include, but are not limited to:

- a downturn in the Australian and/or global economy in general;

- interest rate fluctuations;

- legislative changes (which may or may not have a retrospective effect) including taxation andaccounting issues that may have a detrimental effect on the Fund and its investments;

- inflation;

- natural disasters including earthquakes, social unrest, terrorist attacks or war in Australia oroverseas.

PROPERTY MARKET AND OTHER PROPERTY RELATED RISKS

An investment in the Fund comes with risks associated with investing in property, including a downturn in the property market in general, which can be caused or exacerbated by many factors, including for example restrictions on the availability of credit both locally and even globally.

A downturn in the residential property market or a fall in residential property values may have an adverse effect on the value of the Fund’s investments and the returns to investors. A downturn in the residential market more generally could also impact on retirees’ ability to sell their existing homes impacting on their appetite, and capacity to pay, for alternative accommodation such as MHE dwellings.

The forecast equity return to investors in the Fund will be derived from the profit on the sale of the dwellings, the timing of those sales, the net income from the operation of the estate and the end value of the completed MHE. The timing of dwelling sales (ie. unit sales per month) and the achievable sales price per dwelling may be slower than anticipated for various reasons including general economic conditions, and this will impact the equity returns to investors (refer Sensitivity Analysis in Section 5).

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There are also a number of private and public companies that currently participate in the MHE sector and competition from these groups and other new entrants in the market will increase supply as well as competition both for sites and for end-users of the estate, which could impact on the financial returns from investing in the MHE sector, through potentially slower sales rates and lower values.

The value of completed estates could also go down, depending on many factors, including increases in domestic or global interest rates, which may adversely impact upon the return to Fund investors.

There is also the risk that independent valuations obtained for the Fund’s property investments may not end-up representing the amount the properties can be sold for at a particular point in time.

SPECIFIC RISKS AS THEY RELATE TO MHE INVESTMENTS

The Fund intends to target property that may not benefit from the development approvals required to create a MHE. Acquisitions will generally be structured to minimize this risk but it may not always be eliminated and therefore this presents risks to the deliverability and timing associated with the approval process which may prolong the projects, impacting the equity IRR that is delivered to investors from that investment. It should be noted however that there are no guarantees that development approvals will always be achieved, which could result in an investment being worth less than the purchase price paid by the Fund.

Other specific risks to the type of investments that the Fund intends to make include, but are not restricted to:

- the construction and development costs of the estates and the dwellings may be materially higher than what is forecast at the time investment decisions are taken by the Fund;

- delays may be experienced, such as delays in engineering design and construction approvals by the planning authorities, unexpected decisions by statutory bodies, the performance of sub-contractors, unknown site conditions and/or abnormally adverse weather conditions, together with increased costs, in dealings with various external statutory authorities;

- the costs associated with remediating the site may exceed what is forecast by consultants during the due diligence period;

- the costs associated with operating the stabilised villages may be higher than what is forecast at the time investment decisions are taken by the Fund, impacting on the net operating income and therefore the end value of the completed estates;

- increased supply of competing estates that may adversely impact the demand, and therefore both pricing and the rate of sales that may be achieved on the dwellings and the value of the completed estates; and

- reduced demand from retirees for the dwellings and/or demand from investors for the completed estates may similarly adversely impact the pricing and value that may be achieved for the Fund’s investments.

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OPERATOR AND JOINT VENTURE RISKS

The Fund is entering into a joint venture with Vivacity, with Vivacity to be responsible for key aspects of the Fund’s strategy, including sourcing investment opportunities, managing the development of the estates and ultimately operating the estates. The Fund is therefore reliant on the ability of Vivacity to effectively undertake its responsibilities and implement the Fund’s strategy. Whilst Vivacity is aligned with the Fund to maximise returns, there is no guarantee that Vivacity will achieve its objectives.

The relationship between the Fund and Vivacity is managed through the CVA, which includes the establishment of an Investment Committee to oversee the Fund’s strategy and operations as well as provisions for removal of Vivacity in its roles, in the event of non-performance.

RISKS ASSOCIATED WITH THE FUND FINANCIAL PROJECTIONS

Section 5 provides indicative financial projections for the types of investments that the Fund intends to pursue, however this has been provided for illustrative purposes only as the Fund may not ultimately acquire the asset presented in Section 5. As explained earlier in this IM, achievement of the projections and forecasts in this IM are not promised nor guaranteed, by RF CorVal or by anyone else. The projections and forecasts are based on a number of assumptions, and those assumptions may not turn out to be correct, or they might be impacted by many factors outside of our control. Whilst we consider that, at the date of this IM, the assumptions on which the projections and forecasts are based are reasonable, circumstances can change and it is not possible to accurately predict future events or unforeseen circumstances. This section explains just some of the factors which could adversely impact the achievement of the projections and forecasts.

BORROWING, REFINANCING AND BREACH OF COVENANT RISKS

The Fund will borrow money to partially fund the purchase and development of MHE properties. Gearing comes with risk, and gearing a property investment can increase the potential for capital losses, as well as gains. In the event the Fund is unable to service its respective borrowings, through for example slower sales rates than forecast delaying cash inflows for debt servicing and repayment, the lender may enforce its security over the Fund’s properties. This may include the lender exercising its power to sell properties, which may lead to these properties being sold for a lower price than would have been obtained had these properties been sold voluntarily by the Fund in the ordinary course of business.

The indicative forecasts that have been presented in Section 5 make certain assumptions with regard to the amount of debt secured to fund the Fund’s investment strategy and the level of interest rates. The assumed quantum of debt may not ultimately be achievable and interest rates may rise or fall over the investment term duration of the Trust. There is no guarantee that the assumed level of gearing or interest rates adopted in the Fund indicative forecasts in section 5 will be achieved.

Should refinancing be required at a future point, there can be no guarantee the loan facility will be either renewed, or if renewed, done so on terms at least as favourable as any initial borrowings. Any loan facility will contain various lending covenants and review requirements. If the facility is not renewed, or additional conditions are imposed, this may impact on the return to investors.

For any debt that the Fund secures, the lender will impose lending covenants that include, amongst other things, LVR ratios. In the event of a breach of any loan covenant, that is not remedied, the lender will have the right to take certain measures which may include, in the most serious instances, the forced sale of the Fund’s properties.

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FUTURE CAPITAL RAISINGS

There may be a scenario where the Fund requires additional equity to assist with funding the Fund’s developments, including cost overruns or lower than forecast sales revenues. If it is determined that additional equity is required, RF CorVal will seek to raise the equity by undertaking a rights issue to existing Fund investors with any shortfall then offered to other investors.

TAX

Section 8 summarises some of the tax considerations associated with an investment in the Fund. This summary is not exhaustive and is a high-level summary only.

In addition to this, changes to tax law and policy might adversely impact the Fund and investors’ returns. In particular, the Fund will operate as a stapled structure with the operation of the MHE assets conducted by an entity that is separate to the land owning trusts. There have been significant recent changes to the taxation regime applicable to stapled structures in response to concerns regarding the perceived loss of taxation revenue resulting from such structures. Although these changes have been taken into account in the development of the Fund, it is possible that further changes to the legislation or Australian Taxation Office interpretation of the existing provisions will adversely affect entities such as the Funds.

The taxation character of distributions by the Fund will be affected by the timing of distributions to Vivacity. Relevantly:

- investors will be entitled to all of the distributions of each income character in years in which Vivacity is not entitled to receive a distribution; and

- investors will share the distributions of each income character in years in which Vivacity is entitled to receive a distribution.

The forecasts for the Fund proceed on the basis that profits derived by the MHE Operator Trust will be distributed as franked dividends. The ability to distribute franked dividends requires that tax have been paid on the relevant profits before the end of the year in which the dividend is paid. As the precise timing of tax liabilities is subject to uncertainty and can vary from the recognition of accounting profits, the Fund may be required to defer the distribution of some profit amounts until the relevant tax liability has become payable.

You should therefore obtain independent tax advice in respect of an investment in the Fund.

REGULATORY CHANGES

The introduction of new, or amendment of existing, legislation may have a detrimental effect on specific MHE properties and the MHE sector more generally, including potential changes to rental assistance programs, which could impact on the Fund and investors’ returns.

LIQUIDITY The Fund does not have a fixed term. Investors should view this as a long-term illiquid investment. The Fund offers a Liquidity Facility as described elsewhere in this IM however liquidity is not guaranteed.

GENERAL

An investment in this Fund is subject to investment risk, including the loss of income and capital. RF CorVal does not guarantee the performance of the Fund or return of capital.

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8 TAX INFORMATION Set out below is a summary of the general Australian income tax implications for Australian resident investors (individuals, complying superannuation entities and companies) that will hold their units in MHE on capital account, and have not made a fair value or financial reports election for Taxation of Financial Arrangements (“TOFA”) purposes.

These comments are of a general nature only and do not constitute tax advice and should not be relied upon as such.

This summary is based on Australian tax, stamp duty and GST law, tax determinations and rulings, and the practice of the Australian Taxation Office as at the date of this IM.

STATUS OF MHE

RF CORVAL MHE LAND TRUST

It is intended that the RF CorVal MHE Land Trust will be a ‘flow through trust’ for tax purposes. It is intended that RF CorVal MHE Land Trust will be presently entitled to all of the distributable income of RF CorVal MHE Land Trust. If that is the case, the net taxable income of RF CorVal MHE Land Trust will be included in the assessable income of RF CorVal MHE Land Trust investors in the same proportion to which they are presently entitled to the distributable income of RF CorVal MHE Land Trust. The net taxable income of RF CorVal MHE Land Trust will include its share of the net taxable income of the MHE Co-Venture Fund.

It is also expected that RF CorVal MHE Land Trust will be a managed investment trust for tax purposes, although this is ultimately subject to satisfying various requirements, some of which will be determined by the number and type of investors in RF CorVal MHE Land Trust. If RF CorVal MHE Land Trust is a managed investment trust, it and each land owning trust will make an election to treat their assets as being held on capital account.

RF CORVAL MHE OPERATOR TRUST

It is intended that RF CorVal MHE Operator Trust will be a public trading trust for income tax purposes. As a public trading trust, RF CorVal MHE Operator Trust will be treated like a company for certain income tax purposes. In addition, distributions of profits to RF CorVal MHE Operator Trust investors will be treated as assessable dividends, regardless of whether or not they are attributable to capital gains.

TAX LOSSES

RF CorVal MHE Land Trust and RF CorVal MHE Operator Trust may make tax losses in the initial years of operation. The ability to carry forward these tax losses is dependent upon:

- satisfaction of the relevant continuity of ownership test (broadly, maintaining greater than 50%continuity of ownership); or

- in the case of RF CorVal MHE Operator Trust, the similar business test.

The application of the continuity of ownership test to RF CorVal MHE Land Trust and RF CorVal MHE Operator Trust may be affected by different classes of units on issue. That is, the change in Vivacity’s entitlement to distributions from year to year may be taken into account in determining whether there has been a change in ownership.

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INCOME TAXATION OF DISTRIBUTIONS

RF CORVAL MHE LAND TRUST

Assessable distributions

Distributions to investors may comprise ordinary income, capital gain and non- assessable components.

The taxable component of the distribution made to an investor will be included in the assessable income of that investor in the year to which the distribution relates (i.e. the year in which MHE derives the income, not when it is physically received by the investor).

To the extent that a net capital gain is included in RF CorVal MHE Land Trust’s taxable income, an investor should be regarded as having derived a capital gain equal to the investor’s attributed share of such net capital gain. Where the attributed capital gain includes a discount capital gain component, the investor’s attributed amount is “grossed up” by the discount applied by RF CorVal MHE Land Trust (i.e., the capital gain is doubled).

The gross capital gain (i.e. the whole amount of the gain prior to discounting) is then taken into account in the calculation of the investor’s net capital gain.

In calculating an investor’s net capital gain, the investor may be able to offset its capital losses against the gross capital gain. Once the investor has calculated its net capital gain, the investor may be entitled, in its own right, to a CGT discount. In the case of an investor that is an Australian resident individual or a trust, the CGT discount is 50%. In the case of a complying superannuation entity the CGT discount is 33.33%. Companies do not receive a CGT discount on capital gains.

Non-assessable distributions

The CGT cost base of the investor’s units will be reduced by the non-assessable portion of the amount distributed to the investor. In broad terms, the non-assessable component of a distribution represents:

- returns of capital; and

- the excess of the income distributed by RF CorVal MHE Land Trust over the taxable components ofthat distribution (including the grossed-up amount of any capital gains).

If the CGT cost base of a unit in RF CorVal MHE Land Trust is reduced to nil, any further non-assessable distributions will give rise to an immediate capital gain to the investor.

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Assessable distributions

On the basis that RF CorVal MHE Operator Trust will be a public trading trust, distributions of profits by RF CorVal MHE Operator Trust will be treated as dividends. Investors should include the amount of the dividends paid by RF CorVal MHE Operator Trust in their assessable income in the year in which the dividend is paid. If the dividend is franked and the investor qualifies for franking benefits, then the amount of the associated franking credits should also be included in the Australian resident investors’ assessable income in the year in which the unit trust dividend is paid.

Australian resident investors that qualify for franking benefits will be entitled to franking tax offsets equal to the amount of the franking credits attached to the dividends. Certain Australian resident investors (such as individuals, complying superannuation funds and life insurance companies) are currently entitled to a refund of any excess franking tax offsets.

An investor that is a corporate tax entity is entitled to a credit in its franking account equal to the franking credits received. However, a corporate tax entity is not entitled to a refund of any excess franking tax offsets and such an excess results in a tax loss.

In order to qualify for franking benefits, an investor must satisfy various integrity rules including the “45 day holding period rule”.

Returns of capital

Returns of capital may be paid by RF CorVal MHE Operator Trust.

Returns of capital that are attributable to amounts invested in RF CorVal MHE Operator Trust should not be assessable income of investors. However, investors will be required to reduce their cost base in the units in RF CorVal MHE Operator Trust by the amount of the return of capital. If the CGT cost base of a unit in RF CorVal MHE Operator Trust is reduced to nil, any further returns of capital will give rise to an immediate capital gain to the investor.

The tax legislation contains provisions that can deem a return of capital by a corporate tax entity to be an unfranked dividend. These provisions are broadly drafted and it is not always clear whether the provisions apply in particular circumstances. RF CorVal intends to manage RF CorVal MHE Operator Trust such that these provisions should not apply.

RF CORVAL MHE OPERATOR TRUST

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INDICATIVE COMPONENTS OF THE CASH DISTRIBUTIONS

Any cash distributions that the Fund pays to investors will comprise of various components for tax purposes, given the stapled structure of the Fund. The table below provides an indicative breakdown of these components based on the indicative equity cash flows presented in Section 5 of this IM.

Financial Year Ended

Trust ordinary income

Trust capital gain

Franked dividend

Return of capital

Total distribution

Jun 2020 - - - - - Jun 2021 - - - - - Jun 2022 - - - - - Jun 2023 - - - - - Jun 2024 - - 4.8 10.0 14.9 Jun 2025 - - 2.5 1.6 4.0 Jun 2026 - - 0.7 0.4 1.1 Jun 2027 0.1 - 0.1 - 0.2Jun 2028 0.1 - 0.1 - 0.2Jun 2029 0.1 - 0.1 - 0.3Jun 2030 0.2 - 0.1 - 0.3Jun 2031 0.2 2.7 0.1 3.3 6.4 Total 0.7 2.7 8.5 15.4 27.4

QUOTATION OF TAX FILE NUMBER (“TFN”) OR AUSTRALIAN BUSINESS NUMBER (“ABN”)

Investors will be requested to provide their TFN, ABN or exemption details.

An investor is not required to quote their TFN, ABN or exemption details, but those who do not will have tax deducted from their distributions at the highest marginal tax rate plus the Medicare levy (currently 47%).

The tax withheld is not a final tax and is creditable to the Investor.

FOREIGN ACCOUNT TAX COMPLIANCE ACT (“FATCA”) AND COMMON REPORTING STANDARD (“CRS”)

RF CorVal MHE Land Trust and RF CorVal MHE Operator Trust are required to collect information about the tax residency status of investors, including whether the investor is a US citizen or resident for US tax purposes, and other relevant information under the FATCA and CRS rules. If an investor is identified as a foreign resident, its account information may be reported to the ATO under the FATCA and CRS rules, who in turn may share this information with foreign tax authorities.

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9 RF CORVAL FEES

The Trustee is entitled to receive certain fees in consideration for services provided to the Fund.

PROPERTY ACQUISITION FEE

A property acquisition fee of 0.3% (plus GST) of the total development costs associated with each MHE up to a maximum of $300,000 per project, payable as consideration for the work performed in acquiring each property, carrying out the necessary due diligence and completing the acquisition of each property. This fee will be paid upon settlement of the respective property.

ASSET AND FUND MANAGEMENT FEE

The following fund and asset management fees will be payable to RF CorVal (fees will accrue on a monthly basis and be paid quarterly in arrears):

- During the development phase: 0.25% of total development costs per annum per MHE project (plus GST); and

- From the date the MHE reaches stabilization (typically once 75% of the units have been sold): $120,000 per annum (plus GST), per project

PERFORMANCE FEE

RF CorVal will be entitled to a performance fee on realisation of Fund’s interest in the MHE Co-Venture or alternative exit of the Fund’s investment in the MHE portfolio, provided the total pre-tax IRR to the Fund has exceeded 12% based on equity contributions and distributions over the life of the Fund until the realisation date.

The performance fee will be equal to 20% (plus GST) of the amount by which the pre-tax IRR to investors exceeds 12%.

In the event the Trustee of the Fund is removed, then the performance fee calculation will be performed at the time of removal and any performance fee entitlement will be paid to the outgoing Trustee (if applicable).

GST

The fees outlined in this section are exclusive of GST.

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10 INVESTORS AND MINIMUM INVESTMENT

The targeted minimum investment per investor is $250,000, subject to RF CorVal’s discretion to accept lesser amounts.

The Fund will not be a registered managed investment scheme, and as a result, only wholesale clients (as defined in the Corporations Act) can invest. It follows that an investor in the Fund generally needs to fall within one of the categories below. If you don’t fall into one of these categories, we may still have some ability to accept you, so please contact us.

The main categories:

1. The investor has an accountant’s certificate that shows that they have net assets of at least $2.5 million or gross income for each of the last two financial years of at least $250,000.

The certificate must not be more than two years old.

In calculating the $2.5 million or $250,000, the investor can include the net assets or gross income (as relevant) of any company or trust it controls.

See the next page for the meaning of “control”.

See Accountant’s Certificate.

2. The investor is a company or trust controlled by someone who has an accountant’s certificate as mentioned in number 1.

See the next page for the meaning of “control”.

See Accountant’s Certificate.

3. The investor is a person considered by their adviser to have the requisite investing experience.

See the Adviser’s Certificate.

4. The investor is a person considered by the Trustee to have the requisite investing experience.

Guidance can be taken from the Adviser’s Certificate.

5. The investor invests at least $500,000 at one time (excluding superannuation monies).

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6. The investor invests at least $500,000 together with an “associate” at one time (excluding superannuation monies).

Reasons the investor and someone else can be associated include:

- the other person is a trustee of a trust in relation to which the investor benefits or is capable of benefiting the other person is a person with whom the investor is acting in concert, or proposes to act concert, in respect of the investment; or

- the other person is a person with whom the investor is, or is proposing to become, associated, whether formally or informally, in any other way in respect of the investment

7. The investor and a body corporate which the investor controls together invest at least $500,000 in aggregate.

See below for the meaning of “control”.

8. The investor is a business which is not a small business.

A small business is one that employs less than 100 employees if the business is or includes the manufacture of goods, or otherwise is a business which employs less than 20 people.

9. The investor is a subsidiary or holding company of another body corporate which is a “wholesale client”.

10. The investor is a financial services licensee.

11. The investor is the trustee of a superannuation fund with net assets of at least $10 million.

12. The investor controls at least $10 million Including any amount held by an associate or under a trust the investor manages.

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WHAT IS “CONTROL”?

“Control” means you have the capacity to determine the outcome of decisions about the company or trust’s financial and operating policies.

The practical influence you can exert (rather than the rights you can enforce) is the issue to be considered and any practice or pattern of behaviour affecting the company or trust’s financial or operating policies is to be taken into account (even if it involves a breach of an agreement or a breach of trust).

However, you do not control a company or trust merely because you and a third entity jointly have the capacity to determine the outcome of decisions about the company or trust’s financial and operating policies.

If you have the capacity to influence decisions about the company or trust’s financial and operating policies and are under a legal obligation to exercise that capacity for the benefit of someone other than your members, you are taken not to control the company or trust.

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11 ADDITIONAL INFORMATION REPORTING

We intend to report to you on at least a half yearly basis. Our reporting will comprise the following:

- a confirmation on receipt of your application;

- an investment confirmation upon issuing Stapled Security Interests;

- half yearly performance update reports; and

- an annual tax statement detailing information required for inclusion in your annual income tax return.

Annual and half-year financial reports will be available from RF CorVal. They will not be sent to you unless requested.

CONSTITUTIONS

The Constitutions are the primary documents that governs the way the Fund operates and set out many of the rights, liabilities and responsibilities of both RF CorVal and investors. Each Stapled Security Interest gives you an equal and undivided interest in the Fund. However, a Stapled Security Interest does not give you an interest in any particular part of the Fund.

Subject to the Constitutions, as an investor you have the following rights:

- the right to share in any distributions;

- the right to attend and vote at meetings of investors; and

- the right to participate in the proceeds of winding up of the Fund.

The Constitutions contain provisions about convening and conducting meetings of investors. We can amend the Constitutions without investors’ approval provided we reasonably consider the change will not adversely affect investors’ rights. The Constitutions can also be amended by a special resolution passed by investors.

A copy of the Constitutions are available free of charge from us if requested by an investor.

ANTI-MONEY LAUNDERING AND OUR OBLIGATIONS

Australia has laws governing money laundering and the financing of terrorism. We are required to identify new investors and report ‘suspicious’ matters (the law defines this) to the regulator. Those investors who have not invested with RF CorVal previously will need to complete the appropriate identification form. They are available on our website under “Investor Information” and then “Forms” to be downloaded, completed and then returned to us before the offer closes.

All investors must provide us with all information regarding you and your investment which the law requires, for example, regarding your identity or the source or use of invested moneys. If you choose not to provide us with this information, we can decline to continue to provide services. We will not issue you with Stapled Security Interests unless satisfactory identification documents are provided.

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12 CONCLUSION AND TRANSACTION TIMING

RF CorVal believes this opportunity provides investors with an attractive investment into the growing MHE sector, with the following compelling drivers of expected returns:

- Robust underlying drivers of demand: strong forecast growth in Australia’s ageing population, the lack of affordable housing, and the relative attractiveness of MHEs compared with the alternatives for older Australians, is expected to drive growth of this sector;

- Secure “annuity style” income: completed MHEs offer secure long-term income given the nature of Site Agreements, with occupiers required to make weekly land rental payments under long term leases subject to fixed reviews and with rents often underpinned by government through rental assistance programs;

- Limited ongoing capital investment: completed estates have minimal capital expenditure requirements, generally comprising minor repairs and maintenance throughout the MHE community, with individual residents being responsible for capital costs and general repairs and maintenance of their own MHE dwellings;

- Attractive forecast returns: the “develop to own” strategy is expected to benefit investors, with the target pre-tax returns to investors of 15-20% to be generated both from a share of the development profits, as well as the long-term secure cash flow and ultimate capital value of the estates;

- Access to a specialist property sector with the benefit of an experienced operator: the MHE sector is currently a relatively fragmented and immature sector with a large number of small private owners/operators, creating the opportunity for a specialist, experienced and professional operator, such as Vivacity, to win market share and outperform the sector through the creation of a superior end-product;

- Potential for future capital appreciation: the MHE sector currently trades on relatively high yields compared with other domestic property classes and MHEs in other geographies, offering both attractive income as well as the prospect for future value appreciation if this yield gap closes over time. The potential for yield compression is also expected to be driven by an increase in the attractiveness of this sector to larger institutional investors as the MHE sector grows and matures, given the relative appeal of the underlying long-term secure, indexed cash flows, particularly to pension funds that need to match long term assets and liabilities. Furthermore, a feature of the MHE model is the fact that ownership of the land remains with the owner of the estate and this value is expected to increase in the long run.

Applications from investors will be accepted on a “first come first served basis”, with a target date for the allotment of Stapled Security Interests to investors of 5 July 2019.

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For investors to secure a position within the Fund, a non-refundable deposit equivalent to 10% of their proposed investment will be required.

The key dates for the offer are as follows (each of which are indicative only and RF CorVal reserves the right to change without notice):

By when Receipt of Application Form and 10% non-refundable deposit (no later than) 5 July 2019 Payment of balance of application monies as called by RF CorVal*

* the Stapled Security Interest will be partly paid and callable within the first 2 years after the Closing Date

Level 54, Governor Phillip Tower, 1 Farrer Place, Sydney, NSW 2000

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