p r o s p e c t u s - retail direct property · paradise centre is the dominant retail complex in...

P R O S P E C T U S

PA R A D I S E C E N T R E

A N M C S S E C U R I T I S E D D I R E C T P R O P E RT Y I N V E S T M E N T

D i r e c t o r s o f M C S

Denis Richard Page - Chairman of Directors

Denis Page is a Fellow of the Institute of Chartered Accountantsand is a Fellow of the Institute of Company Directors andChairman of Totalcare Industries Ltd, an ACT Government-ownedcorporatised body. He was a partner of Ernst & Young for over 25years and is Chairman of the Canberra Business Council and holdsdirectorships of business associations, government bodies andprivate companies. MCS is able to draw on Denis’ considerableexperience in capital structures and commercial best practice.

Julius Colman - Managing Director - Chief Executive Officer

Julius Colman holds the degrees of Bachelor of Laws and Masterof Laws from Melbourne University, Bachelor of Arts and is anAssociate of the Australian Property Institute (AAPI). He is ourManaging Director and founded and developed MCS followingmany years of property syndication associated with the legalpractice McGrath Colman Stewart of which he was a partnerbetween 1969 and 1997.

He has led the MCS initiatives in property syndicates, directproperty investments and the Australian Exempt Property Marketand is the President of the Australian Direct Property InvestmentAssociation and a Director of the Australian Property ExchangeLimited.

Anthony Francis Stewart - Director

Tony Stewart holds the degree of Bachelor of Laws fro mMelbourne University and was a partner in the legal firm McGrathColman Stewart. He has been involved in the running of solicitors’investments and mortgage management companies for more than25 years. Tony is the former Chairman of the Chiropractors andOsteopaths Registration Board of Victoria. MCS is also able todraw on Tony’s considerable experience and expertise in disputeresolution and litigation.

Allan Hume Reid - Director

Allan Reid holds the degrees of Bachelor of Engineering andMaster of Business Administration from Melbourne University.He is a Fellow of the Australian Property Institute (FAPI) and aLicensed Estate Agent. He is a former Director and Treasurer ofthe Property Council of Australia. Allan has been involved in theproperty industry for more than 25 years as a developer, as CEO ofa major commercial estate agency and in pro p e rty fundsmanagement. Allan heads up the asset management team.

Glenn Richard Batchelor - Director - Finance

Glenn Batchelor holds a degree in Business, majoring inaccounting, and has had 21 years related experience including 8years with the accounting firm Ernst & Young, in audit, businessmergers and acquisitions. He was then Chief Financial Officer ofa major public property group and then a partner in a nationalproperty management company before joining MCS in 1995.Glenn is a chartered accountant and heads up the accountancyand financial services team.

Anthony Gerard To rney - Director

Tony Torney holds the degrees of Bachelor of Laws and Bachelorof Arts (with Honours) from Melbourne University and a GraduateDiploma in Property. Tony practised law in the areas of legalstructures, property law and commercial litigation and joined MCSProperty Limited at its creation. In addition to asset managingretail pro p e rt y, Tony is responsible for the negotiation andcontractual process on acquisition and the preparation ofprospectus documents.

Peter Raymond McGrath - Director

Peter McGrath holds the degree of Bachelor of Laws fromMelbourne University and the Diploma of Financial Planning andwas a partner in the legal firm McGrath Colman Stewart from1966 to 1997. He is a Director of the publicly listed companyP Cleland Enterprises Limited and is a member of the MelbourneUniversity College Council. He is also the former DeputyCommissioner of the Victorian Liquor Control Commission. MCS isable to draw on Peter’s expertise in all aspects of conveyancing,leasing and mortgage law.

G e o rge Peter Colman - Director - Marketing

George is responsible for marketing, sales, compliance and theoperation and control of an extensive data base of investors,authorised representatives and advisers. He is instrumental incapital raising including the preparation of offer documents.

His background is in marketing, administration, media and publicrelations predominantly in the health field and spent a number ofyears with a publicly listed company as Property Manager andthen as Property Trust Manager. George heads up our marketingand client services team.

Denis Page

Julius Colman

Anthony Stewart

Allan Reid

Glenn Batchelor

Anthony Torney

Peter McGrath

George Colman

Direct Property Investment

In this Prospectus we offer you a Direct Property Investment

in a shopping centre which we believe will provide attractive,

reliable and tax-effective returns.

View of Paradise Centre in foreground with adjoining residential units and hotel

C o n t e n t s

Directors of the Manager Inside Front Cover

This Investment at a Glance 3

10 Important Features 5

12 Questions about this Investment 6

Section 1 The Property 8

Section 2 The Tenants 10

Section 3 The Structure of this Investment 13

Section 4 Time Frame of this Investment 16

Section 5 Our Analysis 18

Section 6 Cash Flow Analysis and Financial Forecasts 23

Section 7 The Manager 27

Section 8 The Custodian 29

Section 9 Borrowings 30

Section 10 Acquisition Costs 32

Section 11 Summary of Valuations 34

Section 12 Risks 36

Section 13 MCS Paradise Centre Unit Trust 39

Section 14 Additional Information 42

Section 15 Report by the Directors of the Manager 48

Section 16 Glossary 49

Section 17 How to Apply 50

Application Forms 52

Directory Inside Back Cover

This Prospectus is dated 3 March 2000 and was lodged with the Australian Securities and Investments Commission on 3 March 2000.

The Australian Securities and Investments Commission takes no responsibility as to the contents of this Prospectus.

No Lots or Units will be issued on the basis of this Prospectus later than 12 months after the date of this Prospectus.

Neither the Custodian, Bendigo Bank Ltd, nor the Manager guarantees the repayment of capital nor the performance of this investment.

MCS Paradise Centre DPI ARSN 086 359 515

MCS Paradise Centre Unit Trust ARSN 086 359 266

T h i s I n v e s t m e n t a t a G l a n c e

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Year to Year to Year to Year to Year to Year to Year to6 / 2 0 0 1 6 / 2 0 0 2 6 / 2 0 0 3 6 / 2 0 0 4 6 / 2 0 0 5 6 / 2 0 0 6 6 / 2 0 0 7

Forecast Annual Returnon Equity Invested 9.75% 10.00% 10.25% 10.50% 10.80% 11.10% 12.10%

Tax Advantaged 37% 39% 41% 41% 40% 38% 34%

This page contains a brief overview of the investment. To make an informed assessment you must read the whole Prospectus and obtain your own independent professional advice.

Paradise Centre

Purchase Price $88m

Yield on Purchase Price 10.01% (on passing income)

Valuation $95m

Tenants Woolworths112 specialty tenants5 ATMs5 kiosks

Site Area (m2) 26,405 (approx. 6.4 acres)

GLA (m2) 21,259

Car Spaces 442

Estimated Returns to Investors

This investment is forecast to produce a 7 year Internal Rate of Return (IRR) of 14.5% (see detailed analysis in Section 6).Quarterly distributions will be made to Investors.

Aerial view of Surfers Paradise

Paradise Centre entrance

1 0 I m p o r t a n t F e a t u r e s o f t h i s I n v e s t m e n t

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1 . Ve ry Good Return

Expected to be 9.75% in the 1st year rising to 12.10% in the 7th year (see Section 6.1).

2 . Substantial Tax Benefits

Under existing legislation 37% of the 1st year’s return to Investors is expected to be tax advantaged, with a tax advantagedcomponent of 39%, 41%, 41%, 40%, 38% and 34% in the 2nd to 7th years respectively (see detailed explanation in Section 6.5).

3 . Position! Position! Position!

Paradise Centre is the dominant retail complex in Surfers Paradise occupying some 2.6ha (6.4 acres) on Cavill Avenue/Cavill Mallbetween the beach at one end and the Gold Coast Highway at the other.

4 . Attractive Purchase Price

The purchase price of the property is $88m and it has been independently valued at $95m. This immediate upside is furtherenhanced by rental growth prospects and the significant potential to add value through reduced costs and through redevelopmentof the Centre (see Section 5.9 for more detailed analysis).

5 . S t rong SWOT Result

This Centre’s SWOT analysis (i.e. analysis of its strengths, weaknesses, opportunities and threats) is the strongest we have seenfor any centre we have investigated (see Section 5.7).

6 . Retail Pro p e rty Exposure

The property is in the retail sector of the property market, a sector which has outperformed the other major sectors (office, industrial)over the long term, yet with less volatility (see Section 5.1).

7 . Diversity of Asset Class and You Know What You Are Buying

For those wishing to have an investment in a spread of asset classes, this DPI offers a true investment in direct property. As well,your investment is in the property described and analysed in this Prospectus, not in a vehicle that can buy and sell real estatewithout reference to you. You become a part-owner of this property (or in the case of Unit Trust Investors the owner of Units in atrust that becomes a part-owner (see Section 13)).

8 . Regular Payments

Payments will be made to Investors every 3 months (see Section 6.2).

9 . Suitability for Superannuation Funds

Investors, such as superannuation funds, not wishing to borrow in their own right, can, instead, purchase Units in the MCS ParadiseCentre Unit Trust. The Unit Trust will then make the appropriate bor rowings and invest in this DPI (see Section 13).

1 0 . Diligent Management

Investors have the benefit of the professional skills and commitment of a Manager experienced in managing retail properties anddedicated to the protection and enhancement of its Investors’ interests (see Section 7).

This page contains a summary of some of the main features of this investment.To make an informed assessment you must read the whole Prospectus and obtain your own independent professional advice.

1 2 Q u e s t i o n s a b o u t t h i s I n v e s t m e n t

1 . What is the Minimum Investment?

You may invest a minimum of $20,000.

2 . In what Pro p e rty am I Investing?

Paradise Centre, Surfers Paradise, a shopping centre which dominates the heart of Surfers Paradise.

3 . How can I Invest in this Investment?

a) In the typical way by completing the YELLOW Application Form at the back of this Prospectus.

b) Some Investors (such as superannuation funds) may not wish to borrow in their own right. These Investors may complete theGREEN Application Form by which they apply to buy Units in the MCS Paradise Centre Unit Trust, which then, in turn, investsin this DPI and makes the relevant borrowings.

Unless otherwise stated, this Prospectus analyses the investment from the point of view of a typical Investor in the DPI. ThoseInvestors who wish to invest via the Unit Trust must also read Section 13 for details of the differences that will apply to them.

4 . What do I get for my Investment?

You become a part-owner of Paradise Centre and you will receive a Certificate of Ownership identifying your percentage share ofownership (see Section 1.3). If you are a Unit Trust Investor you will receive a certificate identifying the number of Units issued toyou in the Trust and the Trust will, in turn, use your funds to become a part-owner of the property.

5 . Who is the Manager and What Does it Do?

The Manager is MCS Property Limited which, following this purchase, will have under management more than $620m of propertieswith some 1,000 tenants and an annual gross income of about $80m (see Section 7). The Manager is responsible for ensuring thatthe property is managed in the best interests of all Investors.

6 . What are the Manager’s Plans for the Centre ?

MCS has developed significant retail property management skills and has the ability to add value through:

• Optimising the retail mix;

• Identifying and implementing the best expansion and upgrading opportunities;

• Ensuring maximum efficiency in expenditure; and

• Facilitating increases in retail turnovers, thereby enhancing overall Centre performance.

A summary of the Manager’s plans for the Centre is set out in Section 5.9.

7 . Who is the Custodian and What Does it do?

The Custodian, Sandhurst Trustees Limited, was incorporated by an Act of Parliament more than 100 years ago (see Section 8). TheCustodian holds title on your behalf and on behalf of the other Investors (including the MCS Paradise Centre Unit Trust) (see Section3.4). The role of the Custodian is to hold all property in this DPI and to ensure it is dealt with properly under the terms of theConstitution, and it is obliged to exercise due diligence and vigilance in carrying out its duties. As Custodian of the MCS ParadiseCentre Unit Trust it also supervises the issue of units to Unit Trust Investors and the borrowing of its proportion of the loan from thelender (see Section 13).

8 . For How Long are my Funds Committed?

The Manager expects the property to be held for about 7-8 years and then sold. The Manager has made application to theAustralian Securities and Investments Commission (ASIC) for Investors to be able to exit their investment earlier than on sale of theproperty, by means of an Exempt Stock Market (see Section 4.2). However you should plan to stay in this DPI for its durationas there is no guarantee that your Lot can be sold prior to the sale of the property nor that the Exempt Market application willbe granted.

9 . A re there any Tax Advantages in this Acquisition?

Yes. The Manager believes that 37% of your 1st year’s return will be tax advantaged and that thereafter 39%, 41%, 41%, 40%,38% and 34% of your distributions will be tax advantaged in the 2nd to 7th years respectively (see Sections 6.4 and 6.5).

1 0 . Can you Explain the Borrowing Arr a n g e m e n t s ?

Investors will collectively subscribe about $45.5m and the Manager will arrange for a lender to provide loan funds to the Investorstotalling about $51.75m (see Section 9). This provides sufficient funds to cover the initial acquisition costs and establishment fees.A further facility will be arranged and will be gradually utilised for planned refurbishments and for normal upkeep of the pro p e rty (seeSection 9). For Unit Trust Investors the Custodian will do the borrowing on behalf of the Trust on the same basis (see Section 13.8).

1 1 . Is my Liability as an Investor in this Acquisition Limited?

The bor rowing arrangements limit the liability of Investors to the funds they subscribe. The lender will have rights against theproperty and the income but no further recourse to the Investors (see Section 9).

1 2 . What happens to my Subscription before Completion?

It is important to get your subscription in early because the Manager has the right to close this Issue as soon as it is fully subscribed.Until settlement, your money will be held for you by the Custodian and returned to you in full, together with interest earned, if forsome reason this DPI does not proceed or if there is an over-subscription or your application is not accepted (see Section 1.3).

These 2 pages contain answers to commonly asked questions.To make an informed assessment of this investment you must read the whole Prospectus

and obtain your own independent professional advice.

0

T h e P r o p e r t y

1 . 1 Paradise Centre

Paradise Centre has a superb location in Surfers Paradise and isthe dominant retail complex in the Surfers Paradise centralbusiness area.

Paradise Centre dominates an island site and has a huge frontageof 232m to Cavill Avenue/Cavill Mall, more than 100m of frontageto the Esplanade overlooking the main Surfers Paradise beach,and a frontage of 87m to the Gold Coast Highway.

The land area of the Centre is 2.64ha (approximately 6.4 acres).

The Centre has a total lettable retail area of approximately21,200m2 plus basement car parking for 442 cars.

The property comprises 94 separate titles (one freehold allotmentand 93 freehold strata allotments) on various building plans. Anarea fronting the Esplanade is held on lease from the Gold CoastCity Council at a nominal rental, for a period of 50 yearsterminating in June 2031.

1 . 2 L o c a t i o n

Surfers Paradise is some 80km south of Brisbane and is the keytourist and holiday destination on the Gold Coast (see plan right).The Gold Coast accounts for nearly 10% of the population ofQueensland. It is the 8th largest urban area in Australia and isA u s t r a l i a ’s fastest growing municipality. It is projected tocontinue strong population growth over the next decade at anannual rate of around 2.5%-3% (see Section 5). This rate ofgrowth is substantially higher than expected in any of the fivemainland capital cities.

The Gold Coast is a very strong tourist market with 3.4 millionvisitors each year.

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11 . 3 Te rms of Purc h a s e

The ContractsAn Option Agreement has been entered into for the purchase ofthe Paradise Centre, Surfers Paradise, Queensland, for $88m.(The Vendor, a Japanese corporation, purchased this property in1988 for $172m and then, it has advised, spent $16m in capitalexpenditure.)

The Option Agreement allows us time to complete thorougheconomic, demographic, retail, tourist, engineering serv i c e s ,structural, survey, environmental, occupational health and safety,legal, planning and other checks; to verify income, outgoings andleases; to arrange finance for the acquisition; and to prepare thisProspectus.

Whilst settlement is anticipated to be on 23 May 2000, our aim isto settle shortly after full subscriptions are received and so it isimportant to send your subscription in early. The Manager has theright to close this Issue as soon as it is fully subscribed.

Yield Paradise Centre was purchased on a yield calculated to be10.01% using the net income provided in the valuation report.The yield is 10.59% on forecast income in our 1st year ofownership.

How the Purchase ProceedsA company associated with the Manager has entered into theOption Agreement. Once full subscriptions are raised, SandhurstTrustees Limited will be nominated as Purchaser under theAgreement and Sandhurst will then complete the purchase asyour Custodian.

Until the purchase is settled, all subscription monies will be heldby the Custodian in a bank account established for that purpose.Interest earned belongs to the Investors.

If the purchase is not completed within the terms of thisProspectus, then the Custodian will refund all Investors’ funds infull, together with interest earned thereon (less any bank charges,FID and BAD).

Certificate of OwnershipWithin 28 days of completion of the purchase, the Manager willmail to you a Certificate of Ownership which details the amountyou have invested, the total amount invested by all Investors andthe precise percentage share which you have in the beneficialownership of the property.

Location of ParadiseCentre in Surfers Paradise

2

T h e Te n a n t s

S E C T I O N

2 The main shopping components of the Centre are:

1 . The Internal Mall

The internal ground floor mall of some 80 tenancies connects theGold Coast Highway at one end with the Esplanade and the beachat the other.

This internal mall represents one “engine room” of the Centre andhas a mix of services such as newsagency, pharmacy andbanking. It is also the main fashion and non-food retail area.Well known traders represented in this Mall include Westpac,Commonwealth Bank, Suncorp Metway (ATMs), Darrell LeaChocolates, Florsheim, Athlete’s Foot, Strandbags, Bright Eyes,Canterbury, Wendys, Michael Hill Jewellers, Westco Jeans,Brothers Neilson Surf Wear, Colorado, What’s New and others.

2 . Shops and Restaurants Fro n t i n gCavill Avenue/Cavill Mall

The prime 232m frontage on to Cavill Avenue/Cavill Mall has amix of some 25 tenancies including services (Travelex TravelBureau, Thomas Cook, Ray White Real Estate) as well as somefashion. Primarily this very busy and popular Cavill Mall frontageconsists of restaurants and bistros i.e. Charlies on the Mall,Tamari Italian Bistro, Healthy Squeeze, Maloneys Cafe, Cafe Cino,Hungry Jacks, and, of course, Hard Rock Cafe. Hard Rock Cafeoccupies an area of 1,837m2 on a 10 year lease expiring inJanuary 2006 with options of 10 + 5 + 5 years.

3 . Esplanade and Beachfro n t

This area is leased to 11 tenants including a number of foodoperators such as Red Rooster, a number of surf wear and surfshops and some downmarket fashion traders. This end of theCentre presents an exceptional opportunity for redevelopment, toimprove the retail mix and to increase income (see Section 5.9).

4 . Basement Are a

The basement area includes a Woolworths supermarket anda car park with 442 car spaces. Woolworths occupies an area of2,893m2 on a 20 year lease which expires in December 2004. Ithas two options of 5 years each. The current base rent paid byWoolworths is approximately $530,000 p.a., is reviewed every 5years and was last reviewed in 1999. In addition to base rent, thetenant pays turnover rent of 2.5% of gross sales over a thresholdlevel and also pays an amount, currently 0.5% of base rent, aspart of the promotional fund. The car park is operated under a carparking management agreement to Secure Parking (Queensland)Pty Ltd.

5 . The First Floor Entertainment Precinct

This area includes the Funtasia Family Entertainment Centre andSurfers Paradise Ten Pin Bowling as well as the AustralianShooting Academy, the Japanese Tourist Bureau, a large tavern,food outlets, offices and medical uses.

Other DetailsSpecialty leases are generally similar in structure, with termsranging from 3-6 years with 5 years being the most common.Most leases provide for annual fixed or CPI increases with somemarket reviews.

The Centre has 122 specialty shops including 5 kiosks and5 ATMs.

Its tenancy profile is attractive with 57% of total rental derivedfrom national traders, national franchises or chains. Well knowntraders within the Centre include Darrell Lea Chocolates,Florsheim, Athlete’s Foot, Strandbags, Bright Eyes, Canterbury,Wendys, Michael Hill Jewellers, Westco Jeans, Colorado, What’sNew, Mr Minit, Westpac, Commonwealth Bank, Suncorp Metway( ATMs), Red Rooster, Hungry Jacks, Royal Copenhagen (icecream), Foot Locker, Australia Post, Thomas Cook, Travelex MoneyExchange, Ray White Real Estate, Brothers Neilson Surf Wearand, of course, key tenants Woolworths and Hard Rock Cafe, andothers.

Tenants such as the Funtasia Family Entertainment Centre and theSurfers Paradise Ten Pin Bowling add a dimension to the ParadiseC e n t re not available to other retail centres within Surf e r sParadise. These facilities attract a large number of visitors. Theya re particularly important for the evening entertainment offamilies who visit the Gold Coast, and especially on days ofinclement weather when the beach is a less attractive option.

The strength of the Centre and its tenants is reflected in itshistory of very few vacancies.

FLOORPLAN LEGEND

Retail areas

Public areas

Shared public areas

Services, fire escapes etc.

Area not being purchased under this DPI

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2

FIRST FLOOR

GROUND FLOOR

B A S E M E N T

Various retail tenancies at Paradise Centre

T h e S t r u c t u r e o f t h i s I n v e s t m e n t

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3 . 1 D i rect Pro p e rty as an Asset Class

We believe that property, as an asset class, offers an almost unique feature. It is one of the very few asset classes that actually deliversthe fundamental goal that you are trying to achieve through diversification - the increased safety that comes from owning assets thatperform in different ways at different times. Property does this by being one of the few asset classes that tends to move in differentcycles (i.e. in negative correlation) to the other main asset class of shares (see Figure 3.1 below):

F i g u re 3.1All Ordinaries vs Listed Pro p e rty Trusts vs Direct Pro p e rty (Rolling Annual Total Return s )

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And as this chart shows, it is direct property, rather than Listed Property Trusts, whichprovides the negative correlation to shares that you seek by diversifying into property.

3 . 2 The MCS Direct Pro p e rty Investment (DPI) Stru c t u re

In this DPI, MCS offers you part-ownership of the Paradise Centre shopping centre.

Our structure allows a number of Investors, who may each invest different sums of money, together to purchase quality property.

There is no partnership between Investors. Rather, you, as the Investor:

• Become a part-owner of the property described in this Prospectus;

• Appoint MCS to manage the property and this investment on your behalf pursuant to this Prospectus and the Constitution;

• Give a limited Power of Attorney to MCS to arrange the borrowings referred to in this Prospectus; and

• Have your part of the ownership of the property held on your behalf by an independent Custodian, Sandhurst Trustees Limited.

Your precise share in the ownership is the proportion which your investment bears to the total of all sums invested.

This investment will have the following key features of an MCS DPI:

Closed-End• A clearly identified real property asset in which you invest i.e. you know what you are buying;

• No property can be added other than property which is associated with, related to, or adjoins the Paradise Centre. Such propertymay not cost more than 15% of the value of the Paradise Centre;

• Immediately the Paradise Centre is sold you share in the benefits of the sale; and

• Your equity cannot be watered down by the issue of additional equity.

Source: ASX, JLL Advisory

Listed Property Trusts

JLL Composite Property

All Ordinaries Index

6

T h e S t r u c t u r e o f t h i s I n v e s t m e n t ( c o n t . )

Fixed-Term• We expect the investment to be held for around 7-8 years;

• Under the terms of the Constitution, the property cannot beheld for more than 10 years (see Section 14.12) unless eitherall Investors agree, or:

- the Manager deems it to be in the best interests ofInvestors; and

- each Investor who wishes to exit the investment, for allor some of his or her Lots, is able to do so at a valuewhich is fair, transparent and independently established,and which reflects a sale, at market, of the property.

Investors taking a long term investment approach also have thefurther advantage in our investment structure that if the Managerdeems it in the Investors’ interest that the property continues tobe owned and each Investor who has sought to exit has beenaccommodated in the manner set out above, then ownership ofthe property can be continued beyond the forecast period withouttriggering a capital gains tax liability or incurring additionalstamp duty.

3 . 3 Advantages of our DPI Stru c t u re

We have chosen this structure because we believe, for all thereasons set out below, that it is the best available for manageddirect investment in property.

• It is designed to give you a way to invest in property as anasset class without having to face the hurdles that makeproperty investment difficult, such as:

- selecting quality property investment opportunities;

- finding quality property in an affordable price range;

- conducting the enquiries necessary to ensure as far aspossible that the investment is a sound one. In thisinvestment, costs incurred in due diligence and legalexpenditure alone total $296,500; and

- affording the professional skills in management whichare often so important in producing better propertyperformance.

• You know precisely what you are buying because theproperty in which you are investing is described in detail.You share in its performance and, when it is sold, you sharein the proceeds of sale (i.e. the proceeds are not used to buyother properties).

• The investment is “closed-end”. Either the property will besold, or you will be able to exit your investment at the valueof the underlying property, within a specified time frame (seeSection 4.1).

• Your investment is in direct property. You can rightly expectthis investment to perform in line with the property market,rather than in line with the share market. This can be veryimportant to you if you are trying to obtain a spread ofinvestments.

• You will be taxed at your own tax rate on the income fromthis investment and you may offset income and capital gainsfrom this investment against any tax losses that you mayhave.

• If an Exempt Market listing is approved (see Section 4.2) youmay be able to exit your investment without having to waituntil the property is sold.

• And by following our recommended strategy (see page 38)you can use our structure to gain the benefits of diversity.

3 . 4 Independent Custodian

As one of the beneficial owners of the property, your name wouldnormally appear on the title. However, because of the imprac-ticality of having the names of all Investors on title and on allleases, permits and applications, an independent Custodian,Sandhurst Trustees Limited, holds your beneficial interest in theproperty for you and is obliged under the terms of the CustodianA g reement to ensure that all dealings with the pro p e rt y,performed by the Manager, are carried out in accordance withthis Prospectus and the Constitution. (For more details about theCustodian see Section 8.)

MCS has entered into an agreement with Sandhurst TrusteesLimited, engaging it to be the custodian of the property (seeSection 14.2). MCS does not hold title. It is held for you by thisindependent Custodian.

3 . 5 Rights of Owners

This DPI was created and is regulated by a Constitutionwhich was lodged with ASIC on 17 February 1999 and by Deedsof Variation dated 22 March 1999 and 24 Febru a ry 2000(see Section 14.2).

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3Your rights are set out in the Constitution and the CorporationsLaw. These rights include:

• The right to the net income;

• The right to have the Manager and the Custodian performtheir duties in a proper and efficient manner;

• The right to have the Manager removed pursuant to theterms of the Constitution;

• The right to have the Manager convene meetings and for youto vote at such meetings; and

• The right to receive copies of the accounts and regularreports relating to the investment.

3 . 6 Managed Investments Act (MIA)

The DPI and the Trust are re g i s t e red Managed InvestmentSchemes regulated by the Corporations Law, in particular theprovisions of the Managed Investments Act.

As required by the Managed Investments Act, MCS has lodged aConstitution and Compliance Plan at ASIC, and has entered into aCustodian Agreement with Sandhurst Trustees Limited. MCS hasalso appointed a Compliance Committee and an Auditor of theCompliance Plan. Details are set out in Section 14.2.

3 . 7 Complaints Resolution

MCS has a complaints resolution procedure and is a member ofthe Financial Services Complaints Resolution Scheme.

If you have a complaint, you may contact the MCS ComplaintsOfficer on (03) 9639 4511 or write to the Complaints Officerat MCS Pro p e rty Limited, Level 28, 55 Collins Stre e t ,Melbourne, 3000.

Your complaint will be dealt with and you will receive a responsewithin 15 working days.

3 . 8 No Other Pro p e rt y

The Manager has no power to purchase any other property in thisDPI except where that property is associated with, related to, oradjoins the Paradise Centre. Such additional property can cost nomore than 15% of the value of the Paradise Centre and may onlybe purchased where the Manager believes it to be in the interestsof all Investors.

In other words, you know what it is that you are buying.

3 . 9 Diagram of the Stru c t u re

The relationship between the Manager and the Owners is set outin the Constitution. The relationship between the Custodian andManager is set out in the Custodian Agreement. Both documentsset out the respective rights and duties of the parties.

THE DIRECT PROPERTY IN VESTMENT

THE RESPONSIBLE ENTITYMCS PROPERTY L IMITED

MANAGED BY P R O P E RTY HELD BY

ON BEHA LF OF

THE OWNERS AS TENANTS IN COMMON

THE CUSTODIANSANDHURST TRUSTEES L IMITED

P R O P E R TY PU RCH ASED WITH

OWNERS’ SUBSC RIPTIONS(i.e. the amount you subscribe)

LOANS TO OWNERS( n o n - re c o u r s e )

A N D

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T i m e Fr a m e o f t h i s I n v e s t m e n t

4 . 1 Time Frame

This investment is expected to have a time frame of around7-8 years.

Under the terms of the Constitution and this Prospectus, theproperty cannot be held for more than 10 years unless both:

• The Manager deems it to be in the best interests of allOwners; and

• Each Owner who wishes to exit the DPI, for the whole or apart of his or her investment, is able to exit the investmentat a value which is fair, transparent and independentlyestablished and which reflects a sale, at market, of theproperty.

If this cannot be achieved then the property must be sold.

These provisions give you access upon the expiration of theinvestment period, or upon the earlier sale of the property, to theunderlying property value and this helps to ensure that yourinvestment performs in line with the property market. (As well,throughout your period of ownership you will have had theadvantage of owning an appraisal-based direct pro p e rt yinvestment.)

4 . 2 Exempt Market

The Manager, MCS Property Limited, has been granted FederalGovernment and ASIC approval to conduct a market in interests,such as the ones off e red in this Prospectus, in pre v i o u ssecuritised property investments.

MCS has applied to ASIC to be permitted to conduct a market inthe Lots in this particular DPI and has no reason to believe that itsapplication will not be granted.

If approved, the market, known as an Exempt Stock Market, willprovide an opportunity for Investors who wish to exit or add totheir investment to do so without having to wait until any or all ofthe property is sold.

4 . 3 No Right of Early Wi t h d r a w a l

In the absence of approval for an Exempt Market during theperiod of this investment, an Investor has no right to exit theinvestment until the property is sold or unless a purchaser for thatInterest can be found. There is no undertaking given by theManager that it will find a purchaser for such Interest nor is thereany obligation on the Manager to buy back or redeem.

4 . 4 Te rmination or Winding Up

The Manager has the right to sell the property or a part of theproperty at any time if it believes it is in the best interests ofOwners to do so.

If Owners wish the DPI to be wound up earlier than in accordancewith the provisions of this Prospectus and the Constitution, thenthey may call a meeting of Owners to consider and vote on anextraordinary resolution directing the Manager to wind up thescheme. (On such winding up, the Manager shall be entitled tothe fees set out in Section 7.4 in the same way as if this windingup had occurred at the end of the Period of Investment.)

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Paradise Centre signage

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O u r A n a l y s i s

In this section we tell you about the property and why we havechosen the Paradise Centre for our latest DPI.

5 . 1 It is a Retail Pro p e rty Asset

As Figure 5.1 shows, returns from the retail property sector havesubstantially exceeded returns from other sectors of the propertymarket over a long time and have delivered this out-performancewith less volatility and hence greater security.

Figure 5.1

Australian Asset Class Performance AnalysisJune 1985 - June 1998

Source: University of Western Sydney

5 . 2 Position! Position! Position!

The Centre has an “unsurpassable location in Surfers Paradise”Jebb Holland Dimasi (JHD). It is the dominant retail andentertainment complex in the area.

It occupies an island site of 2.6ha (some 6.4 acres) with extensivefrontage to Cavill Avenue/Cavill Mall, the Gold Coast Highwayand the beach. It holds this exceptional position in what is the8th largest urban area in Australia.

As a result the Paradise Centre generates 8.5 million customervisits each year, putting it on a par with regional shopping centresthroughout Australia.

5 . 3 Excellent Layout

The Centre has an excellent layout (see floor plan in Section 2). Afeature of this layout is the single internal mall, running for some230m with no “dead areas” and with specialty tenancies oneither side. Another feature is that the mall runs from the beachat one end to the Gold Coast Highway at the other. A third featureof the layout is that along its entire length it runs parallel to CavillAvenue/Cavill Mall.

5 . 4 S t rong Perf o rm a n c e

The Centre is a strongly performing centre. Analysis by JHDshows:

• Our non-food specialty tenancies (e.g. fashion, services)show average sales performance 14% above the average forsuch stores in regional shopping centres in Australia (thehighest trading shopping centres in Australia). These non-food specialty tenants form by far the most important broadcategory of tenants at Paradise Centre accounting for some4,380m2 of the total 7,570m 2 of retail specialty shop space.

• Hard Rock Cafe is achieving sales comparable to the bestcafes and restaurants in such locations as Darling Harbour inSydney and Southgate in Melbourne.

• Our Woolworths is trading at a solid $7,600 per m2.

• The turnovers of our cafes and restaurants are above theaverage trading level of cafes and restaurants at regionalshopping centres in Australia.

• A significant opportunity also lies in the fact that the salesperformance of our take-away/food court tenancies is some50% below the average achieved in regional centres. Sincemuch of this under-performance is at the beach end, we seeconsiderable room for growth in income from this tenantcategory.

• Analysis of our tenants’ occupancy costs (rent and outgoingsas a proportion of turnover) shows “sound scope forimprovement in the level of income generated by existingfloor space” (JHD). “Projected strong growth in tourism inthe Gold Coast, particularly from international tourists,should create further scope for improved income.” (JHD) (Ifoccupancy costs are low then tenants are generally happier,stay longer and there is greater potential to achieve rentalgrowth at a higher rate than inflation.)

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• In this Centre the occupancy costs of non-food specialtytenants (i.e. the majority of our tenants) are on average8% below the average in Australian regional centres.

• The vacancy rate of the Centre is very low.

5 . 5 Attractive Purchase Price

We believe that, at $88m, the property has been bought well.This is supported by the valuation of Herron Todd White (seeSection 11) which has valued the property at $95m.

5 . 6 D i v e r s i f i c a t i o n

The Centre enjoys its own form of diversification. Its net incomedoes not rely upon one or two major tenants but rather a largenumber of tenancies, each of which contributes to the cash flow,and so the risk that flows from the possible failure of any singletenant is lower.

The Centre also enjoys diversification in another way. It hasseveral different precincts, each of which has a separate anddistinct retail offer and each of which adds to the appeal of theCentre as a whole:

• Food and groceries from Woolworths;

• Extensive restaurant and other retail fronting Cavill Mall;

• Services such as banks, pharmacy, newsagency and fashionon both sides of the main internal mall;

• Entertainment at the first floor level; and

• The beachfront precinct.

5 . 7 S t rong SWOT Result

Whenever we look to buy property we conduct a SWOT analysisi.e. we have our consultants appraise its Strengths, Weaknesses,Opportunities and Threats.

The conclusions of the SWOT analysis of the Paradise Centre are,quite simply, the most favourable that we have seen in anyproperty that we have purchased. Its strengths are stronger andmore enduring. Its weaknesses and threats are minor and easilymanaged or overcome, and its opportunities are significant.

The SWOT analysis, conducted by JHD, together with ourcomments (in bold) is as follows:

S t re n g t h sParadise Centre’s key strengths are:

• Unsurpassable location within Surfers Paradise CBA.

• Single shop arcade on ground level with no dead areas.

• Very acceptable occupancy cost ratios.

• Good mix of retail and entertainment to cater for allcomponents of the tourist market.

WeaknessesThe key weaknesses of the Centre are summarised below:

• Very poor retail development along the beach frontage atpresent. (We plan to improve this substantially.)

• Somewhat tired appearance in terms of shop fronts andfitouts. (Readily improved.)

• Not strong enough on brands, particularly for non-food(apparel) tenants. (This is an area in which we believewe can add a lot of value.)

• Poor quality food catering offer, particularly take-away storesin the beach frontage area on the Esplanade. (Readilyimproved.)

OpportunitiesA number of opportunities exist to increase the tradingperformance of Paradise Centre, in particular:

• Improvement in net rentals for existing space.

• Tenancy mix improvements (e.g. take-away stores).

• Remodel beachfront area.

• Attract more trade from Gold Coast residents.

• Surfers Paradise “Heart of the City” initiatives.

• Projected growth in tourist numbers.

ThreatsThe key threats to the future performance of Paradise Centre areconsidered below:

• Its dependence on Gold Coast tourism (which has beensubject to substantial variability in the past). (Forecastsare, however, for strong growth in tourism to the GoldCoast (see next page).)

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5 • The possible development of alternatives/competitors (e.g.Chevron). (JHD expects the impact from the retailredevelopment of the former Chevron Hotel site 0.5kmfrom Paradise Centre to be small.)

5 . 8 Excellent Basis for Future Gro w t h

The Centre exhibits a number of features which provide excellentprospects for future growth. These features are:

a ) G rowth in Customer Base

One of the strongest features which underpins the growthof a shopping centre is growth in the number of itscustomers. The Gold Coast has a very strong tourism baseand growth in tourism is strong and projected to remainstrong (see Figure 5.2):

• Growth in interstate visitors is projected to grow at 2.5%p.a. in the medium term;

• International tourism, which was adversely affectedrecently by the downturn in the Japanese economy andthe Asian crisis, is projected to grow at an annual rate of5.7% p.a. between now and 2006/07; and

• Overall visitation to the Gold Coast is expected to benefitsubstantially from the potential introduction of newairlines, such as Virgin, into Australia.

Figure 5.2

Forecast Gold Coast VisitorsYear to June

Sources: Tourism Forecasting Council, Jebb Holland Dimasi

b ) Retail Expenditure Gro w t h

Retail expenditure in the main trade area of the ParadiseCentre is forecast to grow 4.5%-5.5% p.a. over the period to2006, expressed in inflated dollars (see Figure 5.3).

Figure 5.3

Forecast Trade Area ExpenditureYear Ending June (Inflated $)

Source: Jebb Holland Dimasi

c ) Local Government Support

The Gold Coast City Council has committed $30m to theimplementation of the Surfers Paradise “Heart of the City”program. These monies will be spent on the re-invigorationof Surfers Paradise as the domestic and international tourist,economic and cultural heart of the Gold Coast. Thecompletion of the project is expected around 2002/03.

d ) Gold Coast Highway Impro v e m e n t s

Completion of construction of the 8-lane Gold Coast Highwaybetween Brisbane and the Gold Coast, scheduled for mid-2000, is expected to re-invigorate the Gold Coast. Theextensive construction process over the past few years hascaused disruption and inconvenience for many intrastatevisitors and was a major disincentive for day-trippers fromBrisbane.

e) Potential to Significantly Reduce Outgoings

Outgoings at the Centre amount to $173 per m2. This is asignificant amount which we believe reflects ownership andmanagement of the Centre by an offshore investor. As most

millionInternational

Interstate

Intrastate

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5leases are “gross” leases, i.e inclusive of outgoings, most savings in outgoings flow through to net income. We expect to be ableto reduce these outgoings over time thereby adding to our net income and reducing the occupancy costs of our tenants.

5 . 9 Adding Value - Our Plans for the Paradise Centre

Redevelopment of the beachfront land

Some 2,469m2 (0.6 acres) of land in the prime position on the corner of Cavill Mall, fronting the Esplanade, is currently underdevelopedand underperforming. A development approval has been obtained from the Gold Coast City Council for the expansion and redevelopmentof this area including the creation of a new “Dive!” Restaurant on the prominent Cavill Mall/Esplanade corner. The restaurant featuresa large submarine rising from the building which will provide not only atmosphere but a key anchor to this important corner. It will alsoprovide a significant landmark for the Centre as does the Golden Guitar of Hard Rock Cafe at the other end of Cavill Avenue.

We also intend to create additional specialty shops and remix this area. Currently there are a number of underperforming and unsightlytake-away shops and downmarket fashion shops in this precinct.

As this redevelopment is proposed on land leased from the Gold Coast City Council (see Section 14.3) it is our intention, as soon as wehave settled the purchase, to enter into discussions with the Council regarding the development generally. The current owners haveundertaken, over a period of nearly two years, the lengthy planning and approval process involved with redeveloping this important site.Approval has been obtained from the relevant authorities and all objections resolved. We are not committed to this specific developmentbut it is indicative of what can be accommodated on the site. Preliminary feasibility studies demonstrate this redevelopment to beprofitable and capable of adding significant value to the investment. Plans for this development are shown below.

Upgrade

Surfers Paradise currently suffers from a significant lack of quality and family cafes and restaurants, with nearby Broadbeach and MainBeach having strengthened their food offers in recent years. There is a strong demand for upmarket food tenancies to be incorporatedinto the Paradise Centre particularly in the area fronting Cavill Mall.

We plan to improve the appearance of the main and upper malls. This includes:

• New floor tiling to malls;

• New lighting to malls and facades;

• Ceiling upgrade to malls on both ground and first floors;

• Entry statement improvements and theming; and

• Exterior upgrade and additional signage.

In conjunction with our architects and quantity surveyors we have costed the above works which we intend to undertake in the short term.We have budgeted for additional capital to be borrowed of $3m which will be drawn down as and when required, to complete thenecessary Centre refurbishment and upgrade works. MCS has adopted this refurbishment strategy in many of its centres throughoutAustralia. Funding for internal upgrade and cosmetic work to the Centre demonstrates, to retailers, the Owner’s commitment to the Centreand provides an impetus for negotiations with these retailers for improvements to their store fitouts. Moreover it provides additionalnegotiating leverage converting to higher rentals over time.

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5 Tenancy RemixFollowing from our due diligence enquiries we will review thespecialty shop tenancy mix, particularly at the beach/Esplanadeend of the main mall, to improve the standard and performance ofthe specialty shop retailers, increase the proportion of nationalchains and ensure that the retail offer meets the needs of allshoppers, locals and tourists.

Apart from the funds specifically raised for Centre refurbishmentand cosmetic upgrade ($3m), all works, particularly those worksinvolving the redevelopment of the beachfront land, as detailedabove, would be carried out only on the basis that they arefinancially justified i.e. they pay for themselves.

SummaryOne of the key features we look for in a property is “intrinsicvalue” i.e. special characteristics that give it a value which islargely independent of any particular tenants. Paradise Centre issuch a centre. It enjoys an unsurpassable location. It hasstrongly trading tenants with acceptable occupancy costs. It doesnot rely upon any tenant or group of tenants but rather has anattractive mix of retailers who satisfy the needs of their markets.

It has an excellent layout, enormous customer “pulling power”(attracting 8.5 million visits p.a.), many strengths, fewweaknesses and significant potential. We believe it has beenpurchased at a particularly attractive price and yield.

The Centre provides for the local population, businesses in thearea and for the very significant tourist market, one which isforecast to grow strongly.

It is our goal to deliver additional income and value throughredevelopment of the Centre as well as through remixing andrefurbishment works throughout and reduction of outgoings.

Capital GrowthWe believe that there is sound potential for capital gain in thisproperty and we see such potential capital growth as adding tothe other key elements of the investment which are its secure,attractive and tax-effective returns.

Sound and Good ConditionWe have conducted extensive enquiries into the property, itstitles and structure and into its compliance with fire, mechanical,electrical, hydraulic services, structural standards and planningregulations. As a result of these enquiries we are satisfied thatthe property is in good and sound condition and/or that anydefects and necessary works are adequately provided for withinthe scope of the capital budgets we have allowed.

A number of assumptions have been made in preparing this cashflow analysis and these financial forecasts. These assumptionsare set out and explained in the detailed notes following theforecasts. We believe the assumptions made are well-foundedand appropriate.

Paradise Centre tenants fronting Cavill Mall

Paradise Centre entrance to entertainment area

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6 . 1 Cash Flow Analysis

The following table sets out the annual income we calculate the Centre is expected to produce. Projected outlays are then deducted fromincome. The resultant figure is what we calculate will be the cash distribution which is payable to you each year. This figure is thenshown as a percentage return on your initial investment.

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F o recast Operating Cash Flows ($000s)

Notes Year to Year to Year to Year to Year to Year to Year to Year to1 Jun-01 Jun-02 Jun-03 Jun-04 Jun-05 Jun-06 Jun-07 Jun-08

Total Net Rental Income 2 9,541 10,011 10,423 10,920 11,108 11,353 11,913 12,242

LessInterest to Financier 3 4,275 4,358 4,597 4,639 4,668 4,694 4,709 4,716

Management Fees 4 667 693 716 744 759 777 807 828

- less portion deferred 4 (440) (290) (280) - - - - -

Valuation Fees 5 30 32 33 35 36 38 40 42

Accounting & Audit Fees 6 60 63 66 69 73 77 80 84

Capital Works 7 - - - - - - - -

Promotional Support 8 200 200 200 210 221 232 243 255

Disbursements 9 25 26 28 29 30 32 34 35

Custodian Fees 10 48 49 50 51 52 54 55 56

Exempt Market Listing 11 - 20 21 22 23 24 26 27

MIA Costs 12 20 21 22 23 24 26 27 28

Other non-recoverableexpenses and allowances 13 220 289 306 320 308 349 386 483

Cash availablefor Distribution 14 4,436 4,550 4,664 4,778 4,914 5,050 5,506 5,688

Distribution as apercentage of equity$45,500,000 9.75% 10.00% 10.25% 10.50% 10.80% 11.10% 12.10% 12.50%

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C a s h F l o w A n a l y s i s a n d F i n a n c i a l F o r e c a s t s ( c o n t . )

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6 6 . 2 Notes on Assumptions to Cash Flow Fore c a s t s

1. Forecast cash flows for each year are for 12 months ofincome and expenditure. Cash flows for the period fromsettlement until 30 June 2000 (38 days) have not beenshown separately. Where allowances and estimates areused, these are based on the Manager’s knowledge andexperience (see Section 7).

2. Forecast net income for the property is as assessed by theindependent valuation expert who valued the property (seeSection 11).

3. Interest is calculated at the average rate of 8.2% p.a. oninitial loan funds of $51.75m. We have received anindication that a lending margin of about 1.1% p.a. over theswap rate should be obtainable. The 3 and 5 year swaprates on 29 February 2000 were respectively 6.88% and7.07%. Accordingly, if $38,812,500 was borrowed on the 5year swap rate at that date plus $12,937,500 on the 3 yearswap rate, the resulting interest rate would have been8.12%. Our forecasts are made on a rate of 8.2%. Thecash flow also assumes the same rate of interest for Years4-8. The forecasts provide for further draw downs forcapital and other works of $6m on which we have forecastinterest paid at 8.2% (inclusive of 1.1% margin).

4. An estimate of management fees (payable on the basis setout in Section 7.4).

The Manager will defer recovery of part of the managementfees due in the first 3 years until the sale of the property,unless cash available for distribution exceeds forecasts inwhich case the Manager will be entitled to take suchexcess to reduce the amount defer red.

5. We have allowed for appropriate valuations annually,commencing in the second year (which will be reportedupon in your Annual or Mid-Year Investor Reports), the costof which has been allowed for at an increase of 5% p.a.

6. An estimate of accounting and audit fees (the cost of whichhas been allowed for at an increase of 5% p.a.).

7. An annual sum has not been provided for capital works,O w n e r ’s repair and maintenance, nor for letting upexpenses. Instead these will be provided from the sum of$6m provided for in borrowing facilities at the outset.Interest on these amounts progressively spent over the lifeof the investment has been provided for in 3 above.

8. An estimated general allowance for promotional support bythe Owner for the shopping centre (the cost of which hasbeen allowed for at an increase of 5% p.a. commencing inthe 4th year).

9. An estimate of administration expenses (the costs of whichhave been allowed for at an increase of 5% p.a.).

10. Payable to Sandhurst Trustees Limited at 0.05% of theGross Value of Assets under Management (as defined inthe Constitution).

11. Annual cost of listing the DPI and Units on the ExemptMarket, trading through Austock Brokers. The Managerforecasts this to occur in the 2nd year and costs have beenallowed for at an increase of 5% p.a.

12. Compliance costs associated with the ManagedInvestments Act (the costs of which have been allowed forat an increase of 5% p.a.).

13. Other non-recoverable costs which include lease paymentson the beachfront land, signage, an allowance forconsultants and a general allowance amount (which isunlikely to be required). This general allowance representsa “buffer” that we have allowed against unfore s e e ncircumstances which, if not used, belongs to Investors.

14. Cash available for distribution has been shown as apercentage return on equity invested.

Investors will receive quarterly distributions. The distrib-utions will consist of the surplus income from the propertyafter providing for all expenses and interest on theborrowings. The first payment will be made to you by31 July 2000 covering the period from completion of thepurchase to 30 June 2000 at a forecast rate of 9.75% p.a.Subsequent payments for the year commencing 1 July 2000will be made quarterly, by 31 October 2000, 31 January2001, 30 April 2001, 31 July 2001 at a forecast rateof 9.75%.

Other assumptions made in preparing the forecasts are:

• There are no material changes in the indirect and direct taxregime other than those already announced or the subject ofdraft legislation;

• There are no changes to regulations and legislation thatwould have a material impact on the DPI;

• There is no material change in the competitive environmentin which the Centre operates;

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6• Where allowances and estimates are used these are basedon the Manager’s knowledge and experience (see Section 7);and

• Income and expenditure in the period to 6/2000 includesamounts for the 38 days 24 May 2000 to 30 June 2000. Thedistribution forecast for this period is at 9.75% and ispayable by 31 July 2000.

Internal Rate of ReturnThe investment IRR of 14.5% has been calculated usingthe forecast distributions set out in Section 6.1 and an end sellingvalue calculated by capitalising the 8th year’s income (afterallowing for recurring promotion, repairs and other expenses) at arate of 9.25% (the terminal yield used by the independent valuer).The forecast also allows for all selling costs. The independentvaluer has calculated an IRR of 13.6% for the property alone, andthis was based on its starting value of $95m.

6 . 3 D i s c l a i m e r

Due care and attention has been given to the preparation of theforecasts. However, forecasts by their very nature are subject tosignificant uncertainties and contingencies, many of which areoutside the control of MCS. In a retail property investment, theprincipal uncertainties are tenancy and rental levels and interestrates.

There can be no guarantee or assurance that the forecasts will beachieved and actual results may vary significantly from theseforecasts.

6 . 4 Taxable Income Position

Notwithstanding the taxation reforms arising from the RalphReview of Business Taxation, each Investor will be taxed on theirproportionate share of the taxable income of the DPI i.e. there willbe a flow through of taxation benefits.

Under the new CGT system, the cost base of an asset is no longersubject to indexation. As a result, the total nominal gain issubject to CGT.

Individual Investors will now be entitled to a 50% exemptionfrom CGT, provided that the investment has been held for morethan 12 months. Similarly, superannuation funds will be requiredto include only 2/3 of the capital gain in their calculation of netcapital gain.

Some Investors will participate in the DPI through the MCSParadise Centre Unit Trust. The Ralph Review provides a specificexemption from the new entity taxation regime for CollectiveInvestment Vehicles (CIVs). On the basis of available information,we believe that the MCS Paradise Centre Unit Trust will qualifyas a CIV and so the Trust will be taxed on a “flow through basis”.

Tax preferred income arising from depreciation remains non-taxable in the hands of an Investor, but will lead to a reduction inthe closing tax value of the investment (previously referred to asthe indexed cost base). As a result, any capital gain on thedisposal of Units in the Unit Trust increases by the same amount.

As a result of the Ralph Review, accelerated depreciation will notapply to the plant and equipment we have acquired and plant andequipment will also be subject to reduced rates of depreciation,spreading the claims out more evenly over the effective life of therelevant asset.

From 1 July 2000, GST will be introduced at the rate of 10%. Theonly significant impact of the GST on this investment is likely tobe in relation to long term leases spanning the commencementdate of the GST, where the lessor may not be able to pass on thecost of the GST to the tenant. The Manager believes that theimpact of GST will be minor and is provided for in the forecastcash flows.

Investors who carry on a business of trading in interests, and non-resident Investors, may be subject to differing tax treatment fromthat outlined above.

Taxation laws are complex, and the above comments arenecessarily general in nature. Tax liability is the responsibility ofeach individual Investor, and neither the Custodian nor theManager is responsible for taxation or penalties incurred by anI n v e s t o r. Investors must consult their own taxationadvisers in relation to any tax aspect of this investmentwhich may apply to them.

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6 6 . 5 Notes on Assumptions in Assessment of Taxable Income

The estimated taxable income portion of the distributions which you are expected to receive is calculated as follows ($000s):

Notes:1. This figure comes from the table of Forecast Operating Cash

Flows in Section 6.1.

2. Borrowing expenses are amortised over the lesser of theterm of the loan or 60 months. Roll-over of the facility for afurther 5 years has been assumed to occur at 30 June 2005.

3. Items of depreciable plant and equipment are deemed tohave been acquired at the date of commencement of the DPIusing independent valuations. For the purposes of theseforecasts, the Manager has adopted a conservative approachand amortised plant and equipment over its expected life onthe straight line basis.

4. Division 43 Concessional Building Allowances are calculatedon a straight line basis, at the prescribed rate of 2.5% p.a.

5. The Manager proposes to expend about $6m on capitalimprovements to DPI assets as set out at the foot of thetable of Forecast Operating Cash Flows in Section 6.1. Forthe purposes of this forecast, we have assumed that in eachyear, the funds will be applied towards Plant & Equipmentand Concessional Building Expenditure in the approximateratio 55:45. In each year of expenditure, depreciation hasbeen calculated at the rate of 10% p.a. prime cost on

Plant & Equipment and 2.5% for Concessional BuildingExpenditure. Additions in each year have been depreciatedfor 6 months.

6. An amount of $10,000 p.a. has been allowed as deductibleexpenditure out of general surplus funds.

No forecast has been made of the taxable capital gainswhich may be incurred on the sale of the property of the DPI.

6 . 6 I n f o rmation for your Taxation Return

By no later than the end of August each year, we will provide youwith full audited financial statements together with an individualtax schedule containing the details needed for you to include inyour annual tax return.

Please do not lodge your income tax return until you havethis information.

6 . 7 D e p a rtment of Social Security (DSS)

Income AssessmentsIt is expected that the Department of Social Security will considerthis investment to be a managed investment and income will besubject to the applicable deeming provisions.

Notes Year to Year to Year to Year to Year to Year to Year to Year toJun-01 Jun-02 Jun-03 Jun-04 Jun-05 Jun-06 Jun-07 Jun-08

Cash Surplus 1 4,436 4,550 4,664 4,778 4,914 5,050 5,506 5,688

LessAmortised Borrowing Expense 2 110 110 110 70 70 20 20 20

Depreciation of Plant & Equipment- existing 3 900 900 900 900 900 880 860 830

- new 5 14 132 262 307 324 340 340 340

Division 43- existing 4 611 611 611 611 611 611 611 611

- new 5 18 37 39 40 42 44 46

Repairs, Maintenance & Misc. 6 10 10 10 10 10 10 10 10

Total Deductions 1,645 1,781 1,930 1,937 1,955 1,903 1,885 1,857

Taxable Income 2,791 2,769 2,734 2,841 2,959 3,147 3,621 3,831

% of Return which is Tax Advantaged 37% 39% 41% 41% 40% 38% 34% 33%

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MCS Property Limited (ACN 051 908 984) is the Manager andResponsible Entity appointed under the Constitution and willmanage the DPI on each Investor’s behalf.

The Manager holds Dealer’s Licence No 15729 issued by ASICwhich permits it to be the Responsible Entity of a direct realproperty managed investment under the Corporations Law.

The Directors of the Manager and the people behind thisProspectus are Denis Richard Page, Julius Colman, AnthonyFrancis Stewart, Allan Hume Reid, Glenn Richard Batchelor,Anthony Gerard Torney, Peter Raymond McGrath and GeorgePeter Colman, all of Level 28, 55 Collins Street, Melbourne.

The Manager has covenanted, for the benefit of the Owners, tocarry on the business of this DPI in a proper and efficient mannerand in the best interest of all Owners.

7 . 1 MCS Asset Management Te a m

The Manager has a dedicated team of experienced propertyprofessionals in the areas of property valuations (with 5 valuerson staff), land economy, real estate agency, chart e re daccountancy, property law, engineering, property developmentand property and asset management.

The Directors of the Manager manage properties which, if oneincludes the property in this Prospectus, are valued at more than$620m with some 1,000 tenants and with an annual income ofsome $80m.

7 . 2 Corporate History

The business of the Manager has evolved over the last 25 years.The legal firm McGrath Colman Stewart (hence MCS) initiallyencouraged clients who had little expertise in property, or whocould not afford to buy on their own (or who did not want to putall their eggs in one basket), to join with others in buying realestate. McGrath Colman Stewart would find and then managethe property. The first purchase was a small residential unit. Thenext was a small block of units; then a larger block; then a citybuilding and so on.

This service filled such an untapped need that it quickly grew andled to the establishment of the separate public company, MCSProperty Limited, in 1993.

7 . 3 Corporate Philosophy

We believe that carefully selected, soundly investigated andskilfully managed real estate is an essential part of anyinvestment strategy.

In this Prospectus we offer you the opportunity to invest in realestate in a vehicle that provides some truly excellent features:

• An investment in direct property;

• The potential, if an Exempt Market listing is approved, toexit the investment for the whole or a part of your fundswithout having to wait until the property is sold;

• The potential, at the end of the period of investment, for theinvestment to be rolled over and so avoid triggering a CGTliability and avoid another set of stamp duty and other fees;

• An investment that, if you are a long term Investor, will,throughout your period of ownership, provide an investmentthat is appraisal-based; and

• The features listed in Section 3.3.

Our aim is to generate wealth for our Investors. We believe thatcertain property, in particular that which has the ability to providestrong, reliable and growing cash flows, is very well placed toachieve this. We seek to offer such property in what we believeis the best available securitised property structure.

In this DPI, our aim is to make the returns which are availablefrom an excellent shopping centre accessible to our Investors.

7 . 4 Remuneration of the Manager

The Manager is entitled to an initial fee of 5% of the purchaseprice from which the Manager meets any underwriting fees andcommissions payable.

The Manager is also entitled to an annual management fee whichhas a significant performance component and which is made upof 0.3% of the Gross Value of Assets under Management and4.0% of the Annual Net Income.

At the end of the Period of Investment or earlier sale of theproperty or rollover of the DPI, the Manager is entitled to a fee of2% of the Gross Value of Assets under Management (or sale priceof the property as the case may be) provided that no part of suchfee is payable if, after payment of such part, the amount thenrepayable to each Owner would be less than the capitalsubscribed by such Owner.

S E C T I O N

7

0

T h e M a n a g e r ( c o n t . )

At the end of the Period of Investment or earlier sale of theproperty or rollover of the DPI, the Manager is entitled to aperformance fee of 2.5% of the Gross Value of Assets underManagement (or sale price of the property as the case may be)provided that no part of such fee is payable if, after payment ofsuch part, the amount then repayable to each Owner would beless than the capital subscribed by such Owner plus 50%.

Where any fee received by the Manager is subject to a GST or liketax, the fee paid to the Manager will be increased by this amount.We expect that the DPI will then receive an input tax credit andthe net effect of the GST on the DPI will not be adverse.

The Manager is also entitled to be reimbursed for any costs orexpenses incurred in the management of this DPI.

Neither the Manager, nor its directors nor any intere s t sassociated with any of them, will receive any part of theestablishment fees (including any procuration fee) on anyborrowings nor any part of any agents’ fee on purchase.

7 . 5 M a n a g e r ’s Subscription

The Manager and/or interests associated with the Manager willsubscribe at least $500,000 to this DPI.

S E C T I O N

7

The MCS Asset Management Team

T h e C u s t o d i a n

PAGE 3 1

The Custodian of the DPI is SANDHURST TRUSTEES LIMITED(ACN 004 030 737) (Sandhurst Trustees).

Sandhurst Trustees is a long established and respected trusteecompany, incorporated 112 years ago on 18 January 1888 as aresult of a special Act of the Victorian Parliament. It is dedicatedto providing an efficient service to assist fund managers inobtaining the best possible returns for Investors.

Sandhurst Trustees is a wholly owned subsidiary of the BendigoBank, one of the largest regional-based financial institutions inAustralia.

The role of the Custodian is to hold the property of the DPI ascustodian for the Investors, and to deal with such property only asinstructed by the Manager in accordance with the provisions ofthis Prospectus, the Custodian Agreement and the CorporationsLaw. In performing this role the Custodian must exercise alldiligence and vigilance in carrying out its duties under theCustodian Agreement.

The Custodian receives all investment monies and income onbehalf of the Investors.

The Custodian will be entitled to receive an annual fee for actingas custodian of the Real Estate at the rate of 0.05% p.a. of theGross Value of Assets under Management. This is indexedannually by the percentage increase in the CPI (Capital Cities) andpaid quarterly in arrears.

The Custodian has been involved only in the preparation of thosep a rts of this Prospectus which refer to factual statementsregarding the Custodian or which are derived from the CustodianAgreement. While the Custodian has read the Prospectus, madelimited comments to the Manager, seen the Corporations LawCompliance List of the Manager and confirmed those parts of thisProspectus applicable to the Custodian, the Custodian has reliedon the Manager for the truth and accuracy of the contents of theProspectus. The Custodian is not to be taken to have authorisedor caused the issue of this Prospectus.

Neither the Custodian nor Bendigo Bank guarantees therepayment of capital nor the performance of the DPI.

S E C T I O N

8

Sandhurst Trustees Executive:Left to right - Colin Harris, Andrew Long and Frank O’Brien

2

B o r r o w i n g s

S E C T I O N

9 9 . 1 Loan Arr a n g e m e n t s

The purchase of the pro p e rty will be paid for partly bysubscriptions from Investors and partly by monies lent by afinancier. The total initial capital of this DPI, including retainedfunds for contingencies, stamp duties and fees, is $97,250,000 asset out in Section 10. Of this, about $45.5m will be made up ofequity subscribed by Investors, and the balance of about $51.75mwill be made up of monies provided by a financier.

Each Owner, by subscribing to this DPI, authorises and empowersthe Manager to borrow on his or her behalf in proportion to thatOwner’s subscription to this DPI and grants to the Manager alimited Power of Attorney on the terms set out on the back of theApplication Form to do so.

The Manager may increase loan funds to 66.6% of the value of theproperty if appropriate to do so for the benefit of this investment.Often it is by increasing loan funds in this way that the Manageris able to fund expansion and development.

Whilst the Manager plans to raise equity of $45.5m and to haveinitial borrowings of $51.75m, the Manager may vary the amountinitially raised in equity or debt by no more than 10%. The totalinitial capital shall, however, remain $97.25m.

In addition the Manager plans to arrange for $6m to be borrowedfor refurbishment and capital works. It is planned that these fundswill be provided for in the facilities raised but that funds will onlybe drawn down as needed.

9 . 2 Non-Recourse Loan

The loan is non-recourse to Investors. This means you are not atrisk for any more than the monies you have invested. The lenderwill take no additional security from you and cannot look to youany further in seeking a repayment of the loan.

9 . 3 S e c u r i t y

The financier’s security will be a first mortgage over the property.It will also have a right to the income of the property and to theInterests of the Owners in the event of a default.

The Owners will not be required to guarantee the repayment ofthe loan. Neither will any Investor be responsible for theobligations of any other Investor.

9 . 4 Te rm of the Loan

We believe it appropriate to use a mix of terms for our facilitiesbalancing the costs, risks and perceived benefits. As has beenour past practice we intend to use a mix of 3 and 5 yearborrowings but also retain a capacity to have up to 20% of thedebt floating on a short term basis.

Our forecasts are based on 75% of the loan for a term of 5 yearsor longer and about 25% for a term of 3 years with a right toextend for a further 2-3 years as the Manager deems is in the bestinterests of Investors.

9 . 5 I n t e rest Rate

We have allowed for the average rate of interest to be 8.2% p.a.Whilst loan terms have not been finalised, we have received anindication that a lending margin of about 1.1% p.a. over therelevant swap rate should be obtainable. If the interest rate onthe loan finally arranged exceeds 8.2% by more than 1% p.a. thenInvestors will have the opportunity of withdrawing all their fundsor remaining in the investment as they choose.

The Manager may also adopt a hedging facility where this coulddeliver a lower overall cost of funds without substantiallyincreasing risk.

9 . 6 Repayment of the Loan

The loan will be on an interest-only basis. This means that theprincipal is not due to be repaid until the loan term has beencompleted. Interest on the loan is proposed to be met fromincome generated by the property.

9 . 7 Limited Liability of Owners

The liability of an Owner in the DPI is restricted to the funds he orshe has subscribed. The Manager cannot require an Owner tomake any further payments beyond the amount initially invested.

Furthermore, no Investor is under an obligation to personallyindemnify the Manager or the Custodian or any creditor in theevent of there being any deficiency in the assets of the DPI.Specifically, the rights of the Manager or Custodian or creditorsare limited to having recourse to the Real Estate and the Fund(see Section 14.10).

The question of liability of a beneficiary for claims against atrustee in an arrangement such as this has not however beenfinalised in law.

S E C T I O N

PAGE 3 3

9 . 8 Our Philosophy on Debt

Our view is that debt increases risk. At times, however, it alsoincreases returns both in annual distributions and in capitalgrowth and we believe now is such a time. With quality propertyavailable at yields of around 10% and with 5 year fixed interestdebt available at a cost of around 8.17% p.a., it is our view thatto gear to levels of around 55%-60%, provided that we can lock-in the major components of the loan at the low interest rate for 3-5 years, is sensible.

You may not share this view and so you may wish only to investin one of our DPIs where the level of debt is lower. On the otherhand, you may like the idea of buying a bigger share of moreproperties because the level of debt is higher. This is somethingyou should consider when investing in this investment.

Borrowings of $51.75m against the valuation on purchaseof $95m represent a gearing level of approximately 54%.We intend to draw down the capital works funds ofa p p roximately $6m pro g re s s i v e l y, which on completion willincrease debt to $57.75m. We, of course, expect the additionalexpenditure will also add significant value. We regard this levelof gearing as appropriate to this particular DPI because:

• When one can purchase quality property at yields of around10% and borrow funds to purchase that property at about8.12% p.a. fixed or hedged for 3-5 years or longer, webelieve higher gearing levels make good sense;

• Total income before interest, management fees, etc from thisproperty, even in the 1st year, represents more than twotimes cover on interest on the loan;

• Borrowings are non-recourse to Investors; and

• The gearing level allows access to further funds to meetcapital works and other needs that may be required tofurther upgrade or develop the property.

9

Paradise Centre entrance to entertainment area

4

A c q u i s i t i o n C o s t s

S E C T I O N

10 1 0 . 1 Estimated Acquisition Costs $ $ $

Purchase Price 88,000,000

Legal Fees- on Constitution, Compliance and Prospectus - McGrath Carey Katz 45,000

- on Purchase - Deacons Graham James 20,000

- on Disbursements 5,000

70,000

Due DiligenceConsultants on mechanical, fire, electrical, environmental health and safety,hydraulics, structure, survey, accounting, depreciation, income and outgoings,retail aspects, valuations, leases, legal etc 226,500

Stamp Duty and Registration Fees- on Purchase 3,297,225

- on Mortgage 230,600

- on Transfer and Registration 175,727

3,703,552

Direct Property Investment Fees5% - payable to Manager 4,400,000

Agents Fee on Purchase- ADM Group 440,000

DisbursementsRelating to publication of Prospectus 85,000

Loan FeesIncluding loan establishment fees, procuration fees, legal fees on mortgage etc 250,000

Miscellaneous and Contingencies 74,948

TOTAL 97,250,000

1 0 . 2 S o u rce of Funds

Equity from Investors 45,500,000

Initial loan from Financier 51,750,000

TOTAL 97,250,000

Aerial view of Paradise Centre with adjoining residential units and hotel

6

S u m m a r y o f Va l u a t i o n s

S E C T I O N

11

Gold Coast

GC-31189E

GJD:LM

23 February 2000

Mr A Reid

Director

MCS Property Limited

Level 28

55 Collins Street

MELBOURNE Vic 3000

Dear Sir

RE: Paradise Centre: Cavill Avenue, Surfers Paradise, Gold Coast, Queensland

Instructions

We refer to your instructions requesting us to prepare a valuation of both freehold and leasehold interests

in the abovementioned property. Our valuation is based upon information available in respect of the

property and reflects current prevailing market conditions.

The Paradise Centre was inspected at various dates close to the valuation dated being 20 January 2000.

Valuation Summary

We assess the market value of the property as at 20 January 2000 subject to full disclosure details contained

in our formal valuation report at $95,000,000 (Ninety Five Million Dollars).

Synopsis

The Paradise Centre is the dominant themed retail centre in Surfers Paradise and occupies a city block

bounded on one side by Cavill Avenue and Cavill Mall. The centre provides an approximate gross lettable

area of 21,259 square metres over four levels and there is basement parking for approximately 442 vehicles.

The centre was primarily developed in four stages between 1980 and 1984 and significant capital

improvements were subsequently undertaken in 1994. Title comprises 90 strata lots, a freehold lot of 2,918

square metres plus leasehold beachfront land encompassing 3,164 square metres. The leasehold land has

approximately 31 years and 5 months of unexpired term.

The property is contained within a “Comprehensive Development” zone and current uses are fully

permitted and approved within the zone.

Major and mini-major tenants include Woolworths, Hard Rock Cafe, Funtasia, Ten Pin Bowl and the Surfers

Paradise Tavern. The aggregation of these tenants totals 10,890 square metres (51.2%) and gross rental

income represents approximately 23.3%. There are 115 specialty tenancies, five kiosks and five ATMís, in

addition to the five major and mini-major tenants.

The centre has a predominantly leisure fashion and food mix with an emphasis on entertainment which

caters for its tourism aligned primary market. The centre has particularly strong growth prospects

considering the opportunities to strengthen the food mix and improvements through partial refurbishment

and redevelopment, in particular to the beachfront leasehold land and on the freehold title fronting Cavill

Mall, which are currently under-utilised.

P R O P E RTY VA L U ATION AND ADVISORY SERV I C E S

S E C T I O N

PAGE 3 7

11

Valuation Rationale

Our primary valuation approach is the capitalisation of estimated market stabilised net income at a yield of

9.25% together with appropriate adjustments for Goods & Services Tax non-recovery, fitout, turnover and

profit rents and allowance for capital expenditure. Due consideration has been given to the centreís strong

retail sales performance, and potential for rental growth in view of current occupancy cost levels and

resident and tourist retail expenditure projections.

Sales of major city centre retail properties have been analysed and an analysis of investment yields has been

applied to the subject property. A discounted cash flow analysis on a post GST basis provides an internal

rate of return of 13.6% prior to the factoring of redevelopment potential in respect of the beachfront

leasehold portion of the property and the under-utilised freehold portion fronting Cavill Mall. The internal

rate of return is testament to the strong growth prospects offered by this investment property.

Disclaimer

We confirm that this summary may be used in the Prospectus.

The valuer and this firm advise that they do not have any pecuniary or other interest that would conflict

with the proper valuation of the property.

Gavin J Duthie of HTW Valuers (Gold Coast) Pty Ltd, has prepared this summary. Gavin J Duthie was

involved only in the preparation of the summary and the valuation referred to herein and specifically

disclaims liability to any person in the event of any omission from, or false or misleading statements

included in the Prospectus, other than in respect of the valuation report and this summary.

HTW Valuers (Gold Coast) Pty Ltd trading as Herron Todd White Valuers were involved in the preparation

of the valuation report and this summary and the valuation referred to therein only to the extent of the

involvement of Gavin J Duthie, and specifically disclaim liability to any person in the event of omission

from, or false or misleading statement included in the Prospectus, other than in respect of the valuation

and summary.

Yours faithfully

GAVIN J DUTHIE AAPI LLOYD S PARSONSASSOCIATE DIRECTOR DIRECTOR

CERTIFIED PRACTISING VALUER

QLD REGISTRATION N0. 1382

P R O P E RTY VA L U ATION AND ADVISORY SERV I C E S

8

R i s k s

The future performance of this investment may be influenced bya number of factors, many of which are outside the control ofMCS. The level of distributions in the future, the value of theunderlying property and the value of your investment may all bereduced by any of these risk factors.

In this section you will find a summary of the material risk factors.

1 2 . 1 P ro p e rty Associated Costs

Whilst investment in direct property is an investment in an assetclass with its own distinct advantages, property in Australiacarries with it significant entry and exit costs. These includestamp duties (typically 5%-6% of the purchase price), legal feeson acquisition, due diligence costs (to ensure that the property issound and the income stream upon which a purchase has beenmade is soundly based) etc. Fees on sale typically include agencyfees and advertising and legal expenses. It is common foracquisition and exit expenses on a typical property purchase toamount to 8% or more of the acquisition price before taking intoaccount Manager’s fees.

This means that if you want to preserve the capital that you haveinvested in a property, the property must be sold at a price whichis considerably more than the price at which it was purchased.Sometimes, of course, the extra income that you can earn fromthe property, over and above that which you might have earnedfrom another investment, goes some way to reducing, or evenremoving altogether, the margin that must be made up.Sometimes, too, the very tax effective nature which is typical ofproperty income also works to reduce or remove this margin.

Nevertheless, it remains that, in order for there to be no loss ofcapital, the costs of purchase and exit and the fees payable to theManager, must be recovered in some way.

This Prospectus deals with the issue of making up entry and exitcosts in the following ways:

(i) Allowing a longer time frame for this investment (seeSection 4.1) has the effect of ensuring that the growth invalue that needs to be achieved in order to recoveraverage annual costs, is lower (by virtue of being spreadover more years); and

(ii) The provision for possible rollover (see Section 14.12)further reduces the capital growth that needs to beachieved each year, again by virtue of spreading the coststhat need to be recovered over a longer period of time.

You may also believe that MCS’ fees, spread over the projectedtime of this investment, are an appropriate cost in return for thebenefits offered by diversification and through not having to findand manage appropriate property assets yourself.

1 2 . 2 Timing of Exit

There is a risk that the property market may move downwards.All markets go up and down, and at the time that we may wish tosell the property the market may be in a downturn. With thestructure we use, we are able to be flexible as to the time of saleand have the potential (see in particular Section 14.12) to effecta rollover. Nevertheless, the risk, though reduced, still exists.

1 2 . 3 Level of Debt

In this investment, we have gearing levels approximately of 54%(see Section 9.8) at the time of purchase.

We hold the view that debt increases risk. There are also times,however, when debt increases returns both in income and incapital growth. At times like today, when quality property isavailable at yields of around 10% and debt costs around 8.5% orless, our tendency is to gear to levels of 55%-65%. We aim toreduce risk by fixing the rate of interest on the borrowings in themanner set out in Section 9.4. Having 30% of the debt fixed for3 years gives us the opportunity, at rollover time, to fix that partof the debt for an additional 2 years, 3 years, 5 years or perhapslonger, which creates a further “smoothing” effect.

Our forecasts assume similar rates of interest throughout theforecast period. At the time that our debt needs to be refinanced,interest rates may well be higher. If they are, then returns toInvestors could be affected accordingly. If interest rates rose verysubstantially, then refinancing might not be possible. In such anevent, the property might have to be sold at short notice and in amarket that was not conducive to a speedy sale. These combinedevents could result in a loss of capital.

1 2 . 4 Other Areas or Factors of Risk are :

• Investments in real estate, as in this DPI, ought to be viewedas long term investments and are likely to be illiquidbecause it may be difficult to sell a property or obtain theprice one would wish to obtain at the time one wants to sell.At the date of this Prospectus there is no secondary marketfor such interests (although an application will be made forExempt Market status (see Section 4.2)).

S E C T I O N

12

S E C T I O N

PAGE 3 9

• This is a DPI, the value of which will be determined bymovements in the property market at any particular point intime. Past experience has shown that property values can,and are likely to, fluctuate.

• You have no right to require that your interest be bought byMCS or any other person, nor to have your investmentredeemed.

• Your investment is essentially an investment in retail realestate.

It will accordingly be influenced by factors which affect retailreal estate such as:

- Any downturn in demand for rental of space that may beor may fall vacant;

- Any downturn in the value of the property, or in theproperty market in general;

- Any downturn in the economy;

- Any interest rate fluctuations outside the fixed interestrates assumed in the forecast in this Prospectus;

- Any significant downturn and/or prolonged downturn intourism to the Gold Coast;

- Any adverse consequences of amendments to statutesand regulations affecting the DPI including any changes inthe tax regime;

- Pricing or competition policies of any competing retailproperties or tenants;

- Increased competition from new or existing competingproperty; or

- Any longer term changes in shopping habits.

• Our income depends upon our tenants continuing to operateprofitably and continuing to abide by the terms andconditions of their tenancy arrangements. The ability tolease or re-lease to tenants upon expiry of their currentleases, and the rents achievable, will depend upon prevailingmarket conditions at the relevant time and these may beaffected by economic, competitive or other factors.

• This is an investment in income-producing real estate,consisting partly of invested funds (equity) and partly ofborrowed funds (debt). There are times when real estatevalues fall. When a real estate investment is geared (i.e.purchased with debt) the potential for gains and losses isaccordingly greater. Gearing also has the effect thatacquisition costs, charges and fees represent a higherpercentage of the equity in the purchase than they would if

there was no mortgage and the property was purchasedentirely with equity.

• Details of borrowings are set out in Section 9. The lenderhas no obligation to roll over this funding at the end of theloan period and so there is no certainty that the borrowingswill be able to be replaced as their terms expire. If there isa breach of conditions of the borrowings the lender mayenforce its security and, amongst other things, sell theproperty.

• Building and refurbishment works are proposed which willbe contracted to experienced consultants engaged by theManager to ensure that the works are completed inaccordance with specifications, on time and within budget.Nevertheless, there are always risks attached to buildingworks in the form of delays, cost overruns and risks relatingto the quality of work performed.

• Natural disasters and man-made disasters may occur whichare beyond the control of MCS.

Please note that the performance of this investment, therepayment of capital or any particular rate of return is notguaranteed by the Manager, the directors of the Manager,the Custodian or Bendigo Bank. Property investment, byits nature, carries a level of risk and no guarantee is or canbe given that the property will not decrease in value.

In this Prospectus, we carry a separate single pagedevoted to just one message - that you spread yourproperty investment dollar amongst several of our propertyinvestment offerings. We regard this as the best meansavailable for you to share all the significant benefits of thisform of investment whilst minimising the risks.

12

Diversity

We believe for all the reasons described in our analysis

that this investment is a very good one. However, it is always wise

not to put all your eggs in one basket. We expect to be able

to bring you many fine property investments in the future and these

will give you an opportunity to spread your investment dollar.

View of Paradise Centre in foreground with adjoining residential units and hotel

M C S P a r a d i s e C e n t r e U n i t Tr u s t

PAGE 4 1

The MCS Paradise Centre Unit Trust (the Trust) is for Investors(Unit Trust Investors) who do not wish, or who are unable, toborrow in their own right e.g. superannuation funds. It allowssuch Investors to participate in this DPI through an investment inthe Trust.

As with the DPI, the Manager and Responsible Entity of the Trustis MCS, and the Custodian appointed by the Manager to hold theassets of the Trust is Sandhurst Trustees.

The Constitution and Compliance Plan for the Trust have beenlodged with ASIC. They have been written so as to give to UnitTrust Investors as closely as possible the same rights as those ofInvestors in the DPI, such as the right to surplus cash flow, theright to have the Manager and the Custodian carry out their dutiesin your best interests, the right to regular reports, and the right toinspect the Register.

The ways in which the Trust differs from the DPI are set out in thisSection. Unless otherwise stated, the rights of Unit TrustInvestors and the obligations of the Custodian and the Managerin relation to the Trust are the same as those in relation to theDPI, with all necessary changes being made to comply with thecontext and the Law.

1 3 . 1 Price per Unit and Minimum/MaximumA p p l i c a t i o n

As with the DPI, the Minimum Subscription is $20,000 and theManager may prohibit any Investor from holding or controllingmore than 15% of the DPI at any time. However, rather thanreceiving a percentage share in the beneficial ownership of theproperty as you would if you invested in the DPI, you will receiveUnits in the Trust. The issue price of these Units is $1 per unit.

The Manager reserves the right to allot less than the requestednumber of Units or to decline to issue any Units at all.

On acceptance of all applications for Units in the Trust, theCustodian of the Unit Trust will complete and lodge anApplication Form for a Lot in the DPI.

The relationship between the Manager and the Unitholders is setout in the Constitution. The relationship between the Managerand the Custodian is set out in the Custodian Agreement. Bothdocuments set out the respective rights and duties of the parties.

S E C T I O N

13

THE PROPERTY TRUST

THE RESPONSIBLE ENTITYMCS PROPERTY L IMITED

MANAGED BY LOT I N THE DPI HELD BY

ON BEHA LF OF

UNIT TRUST INVESTORS

THE CUSTODIANSANDHURST TRUSTEES L IMITED

LOT PURCHASED WITH

UNIT TRUST INVESTORS’ SUBSCRIPTIONS(i .e. the amount you subscribe)

1 3 . 2 S t ru c t u re of the Tru s t

2

1 3 . 3 C e rt i f i c a t e

Within 28 days of completion of the purchase of the property, theManager will mail to you a Unit Certificate. This Unit Certificatewill show, as with the DPI, the amount you have invested. It willalso show the number of Units you have been issued in the Trust,the total amount invested in the Trust by all Unit Trust Investors,the total amount invested in the DPI, and the percentage share inthe DPI represented by the Lot held by the Custodian as Custodianof the Trust.

1 3 . 4 Trust Expenses

All expenses of the establishment of the Trust and itsadministration will be funded by the DPI as direct expenses. Noadditional management fee will be charged to the Trust nor willthere be any separate Custodian fee.

1 3 . 5 Distributions and Tax

Unit Trust Investors will receive distributions in the same way asInvestors in the DPI. The forecast distributions in relation toequity subscribed by Unit Trust Investors will be identical to thoseforecast for Investors in the DPI. It is anticipated that the Trustwill be treated as a Collective Investment Vehicle for taxationpurposes. Unitholder distributions will therefore benefit from thesame tax deferrals resulting from depreciation and capitalallowances (see Section 6.4).

1 3 . 6 R e p o rt s

All Unit Trust Investors will receive re p o rts and financialstatements in the same way as Investors in the DPI. Whilst thesereports will contain the same set of information as those inrelation to the DPI, they will also show all relevant information ofthe Trust.

1 3 . 7 Assets of the Tru s t

The assets of the Trust will be quite different from the assets ofthe DPI. The only assets of the Trust will be a Lot in the DPI andany funds resulting from the holding of the Lot.

1 3 . 8 B o rro w i n g s

No Unit Trust Investor will be a party to any loans arranged by theManager in relation to the DPI. The Custodian, after receipt ofUnit Subscriptions, will apply those Subscriptions to invest in aLot in the DPI. As part of this investment, the Custodian willborrow funds in the same way as all other Investors in the DPI.

Unit Trust Investors will have no liability for any borrowingsundertaken by the Custodian.

1 3 . 9 Exempt Market

As with Lots in the DPI, the Manager will be seeking approval foran Exempt Market for Units in the Trust. Unit Trust Investorsshould refer to previous comments in this Prospectus in relationto the Exempt Market.

1 3 . 1 0 Additional Inform a t i o n

In most respects, the Additional Information pertaining to theTrust is the same as that pertaining to the DPI. This section listsonly those sections which differ. In all other respects, TrustInvestors are referred to the Additional Information contained inSection 14, with the necessary changes being made to complywith the context and the Law.

Constitution of the Tru s t

The Constitution has been registered with ASIC. It is the primarydocument which establishes the structure of the Trust. TheResponsibilities of the Manager together with all its duties,obligations and rights pertaining to the Trust are set out in thisdocument.

Date: 17 February 1999

Parties:Manager and Responsible Entity - MCS Property LimitedACN 051 908 984

Original Participants - Dunecorp Pty Ltd ACN 066 986 605,a company associated with the Manager.

Amending Deeds:The Constitution has been amended by Deed of Variation dated22 March 1999 between the Manager and the OriginalParticipants. Otherwise the Constitution has not been amendedor abrogated.

Custodian Agre e m e n t


Parties:Manager - MCS Property Limited ACN 051 908 984Custodian - Sandhurst Trustees Limited ACN 004 030 737

Amending Deeds: As at the date of this Prospectus the Custodian Agreement hasnot been amended.

S E C T I O N

13

M C S P a r a d i s e C e n t r e U n i t Tr u s t ( c o n t . )

S E C T I O N

PAGE 4 3

Compliance Plan

The Compliance Plan dated 11 February 1999, setting out themeasures and processes put in place by the Manager to ensurecompliance with its obligations, has been registered with ASIC.All details in relation to the Compliance Committee are the sameas those of the DPI.

C u s t o d i a n

The Custodian will not receive a fee for acting as Custodian.Otherwise, all information contained in Section 8 in relation tothe Custodian is applicable to the Trust.

M a n a g e r

The Manager will not receive a fee for acting as Manager andResponsible Entity. Otherwise, all information contained inSection 7 in relation to the Manager is applicable to the Trust.

Unit Trust Investors

Meetings: Unit Trust Investors may call, attend and vote atmeetings of the Trust. At a meeting of the DPI, they will be ableto direct the Custodian in relation to any vote taken.

Borrowings: Unit Trust Investors will not take out any borrowings.

Otherwise, the information contained in Section 9 in relation tothe Owners in the DPI is applicable to the Unit Trust Investors inrelation to the Trust.

Sale of the Lot/Te rm i n a t i o n

Sale of the Lot and termination of the Trust can occur only inconjunction with the termination of the DPI, or in accordancewith the provisions of Section 14.12 in relation to winding upof the DPI.

Authorised Investments

Other than the purchase of a Lot in the DPI and money in the bank,there are no authorised investments of the DPI.

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Internal view of Funtasia Family Entertainment Centr e

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A d d i t i o n a l I n f o r m a t i o n

1 4 . 1 I n t ro d u c t i o n

The information contained in this section of the Prospectus is based onthe Constitution, the Custodian Agreement and relevant provisions of theCorporations Law as at the date of lodgment of this Prospectus with ASIC.However, not all provisions of the Constitution, the Custodian Agreementand the law which are relevant to the DPI are outlined here and thoseparts which are included here are summarised. Certain provisions of theConstitution and the Custodian Agreement are outlined in other sectionsof the Prospectus and are therefore not included here. Investors shouldseek their own independent professional advice.

1 4 . 2 Constitution, Custodian Agreement and Compliance Plan

C o n s t i t u t i o n

The Constitution has been registered with ASIC.

It is the primary document which establishes the structure of the DPI. Theresponsibilities of the Manager together with all its duties, obligationsand rights pertaining to the DPI are set out in this document.


Parties:Manager and Responsible Entity - MCS Property Ltd(ACN 051 908 984)

Original Participants - Dunecorp Pty Ltd (ACN 066 986 605),a company associated with the Manager.

Amending Deeds:The Constitution has been amended by Deeds of Variation dated 22March 1999 and 24 February 2000 between the Manager and the OriginalParticipants. Otherwise the Constitution has not been amended orabrogated.

The references to the Constitution that are contained in this Prospectusare to the Constitution as amended by the Deeds of Variation.

Custodian Agre e m e n t

The Custodian Agreement is not required to be registered by ASIC. It isthe primary document which establishes the responsibilities of theCustodian together with all its duties, obligations and rights pertaining tothe DPI. There is no legal relationship created between the Custodian andany Investors, to satisfy the provisions of Section 601FB of the Law.


Parties:Manager - MCS Property Ltd (ACN 051 908 984)Custodian - Sandhurst Trustees Ltd (ACN 004 030 737)

Amending Deeds:As at the date of this Prospectus the Custodian Agreement has not beenamended.

Compliance Plan

The Manager has lodged a Compliance Plan dated 11 February 1999 withASIC. ASIC has registered this Compliance Plan. The MCS ComplianceCommittee is composed of one of our Directors, Glenn Batchelor, our

independent Chairman, Mr Denis Page, and Mr Brian Mitcham who is theimmediate past Manager Corporate Trusts of Sandhurst Trustees. MrThomas Peter Borsky, FCA, Registered Company Auditor of Alexander &Spencer, has been appointed to carry out the audit.

1 4 . 3 Material Contracts

The following contracts are material to a potential investor in this DPI.Each of the contracts is available for inspection (see Section 14.21).

Option Agre e m e n t

PARADISE CENTRE

Date: 20 January 2000

Parties:Vendor: KM Australia Pty Ltd (ACN 003 145 300)

Purchaser: Dunecorp Pty Ltd (ACN 066 986 605), a company associatedwith the Manager.

Property: Paradise Centre, Cnr Cavill Mall, Gold Coast

Title Particulars:Title Reference Nos 16114001, 16114002, 16114003, 16114004,16114005, 16114006, 16114007, 16114008, 16114009, 16114010,16114011, 16114012, 16114013, 16114014, 16114015, 16114016,16114017, 16114018, 16114019, 16114020, 16114021, 16114119,16114120, 16114121, 16114122, 16114123, 16114124, 16114125,16114126, 16114127, 16114128, 16114129, 16114130, 16114131,16114132, 16114133, 16114134, 16114135, 16114136, 16114137,16114138, 16117139, 16114140, 17518233, 16930241, 16930243,16930244, 16930245, 16930246, 16930247, 16930248, 16930249,16930250, 16931001, 16931002, 16931003, 16931004, 16931005,16931006, 16931007, 16931008, 16931009, 16931010, 16931011,16931012, 16931013, 16931014, 16931015, 16931016, 16931017,16931018, 16931019, 16931020, 16931022, 16931023, 16931024,16931025, 16931026, 16931027, 16931028, 16931029, 16931030,16931031, 16931032, 16931033, 16931034, 16931035, 16931036,16931037, 16931038, 16931039

Price: $88,000,000

Option Fee: $200,000

Commission: $440,000

Settlement Date: 23 May 2000

The Option Agreement contains a substitution right which perm i t sDunecorp Pty Ltd to substitute the Custodian as Purchaser.

Lease

Council Land

Commencement Date: 1 July 1981

Lessor: Council of the City of Gold Coast

Property:Title Particulars: Title Reference Nos 18447036 (Lot 1), 18447046 (Lot 2),16756024, 12735105 and 17106096.

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Leased area comprises 4 areas:Leased land - 3,163m2

Basement lease - 625.4m2

Leased land up to RL 10.6m AHD - 295.7m2

Land to be leased above RL 10.8m AHD - 97.6m2

Current Termination Date: 30 June 2031

Rent:Years 1-10 - $5,000 each year; Years 11-50 - $15,000 each year.

Rent Review:The base rent of $15,000 is to be reviewed on 1 July 2002, 2012 and2022 in accordance with movements in CPI.

Term: 50 years

Car Parking Management Agre e m e n t

Owner: KM Australia Pty Ltd (ACN 003 145 300)

Operator: Secure Parking (Queensland) Pty Ltd(ACN 060 113 037)

Term: 5 years commencing on 1 September 1997

Further Terms: There is one further term of 5 years

Use: The provision of commercial car parking, ancillary uses andadditional business, non-competitive with the businesses of the tenantsin the Centre, and as approved by the Owner.

Management Fees: Current base management fee is $525,000 p.a., forthe 3rd year of the term, rising to $738,727.60 in the last year of theoption.

Turnover Fees: In addition to base management fees the operator paysone half of the amount by which the gross revenue for the relevant yearof the term exceeds a specified sum for each year of the term. Thespecified sum in the 3rd year of the term (being the current year) is$854,437.50.

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Funtasia Family Surfers Surfers AustralianLEASES Woolworths Hard Rock Cafe Entertainment Paradise Paradise Ten Shooting

Centre Tavern Pin Bowling Gallery

Commencement Date: 4 December 1984 1 January 1996 1 January 1994 1 July 1995 1 December 1997 1 June 1999

Lessee: Australian HRC (Qld) Pty Ltd Avel Pty Ltd The Pelerman Surfers Paradise Australian Safeway Stores ACN 070 371 792 ACN 009 041 016 Group Pty Ltd Ten Pin Bowling Shooting AcademyPty Ltd ACN 009 977 566 Pty Ltd Pty LtdACN 004 319 939 ACN 011 057 551 ACN 003 145 300

Term: 21 years 10 years 10 years 5 years 5 years 5 years

Options: Two further terms One further term Two further terms Three further One further term Nilof 5 years of 10 years and of 5 years terms of 5 years of 5 years

2 further termsof 5 years

1 4 . 4 Litigation

On 9 December 1999 in the Supreme Court of Queensland, one of thetenants of the Centre, Hard Rock Cafe (HRC) (Australia Pty Ltd), as well asHRC (Qld Pty Ltd) (collectively HRC companies), applied for relief againstthe Vendor, KM Australia Pty Ltd (KM), in connection with their lease.

In those proceedings, HRC companies allege that misleading anddeceptive representations by KM, which it did not have reasonablegrounds to make, induced them to enter into an agreement to lease andlease for the premises in question. They also claim that KM agreed notto lease any part of the Centre to a food and beverage/hospitality relatedbusiness incorporating entertainment (including film, television, music)and related memorabilia concepts. This action relates to negotiations bythe Vendor with a restaurant chain, Dive!, for which negotiations arecontinuing (see comments regarding the development of the Esplanade inSection 5.9).

The main orders the HRC companies are seeking are:

• For the turnover rent payable under the lease to be reduced from7.5% to 5%;

• For the lease to be rectified to prevent the Centre owner fromleasing other parts of the Centre for the purposes of a “themed”restaurant in competition with HRC;

• For an injunction to restrain the Vendor from leasing any part of theCentre for the purposes of a Dive! Restaurant; and

• That repayment of fitout costs ceases.

We have instructed our solicitors to provide advice and to brief a barristerexperienced in this area. Our solicitors and counsel have also had accessto the Vendor’s records of dealings with HRC as well as the files of theVendor’s former solicitors in connection with its dealings with HRC.

The Vendor covenanted with us that as from the date of contract it will:

• Take all reasonable and necessary steps to vigorously defend theaction taken by the HRC companies;

• Meet all costs it incurs in defending such action;

• Not agree to any variation to the lease of such premises (as anincident of such litigation) which reduces the amount payable interms of such lease; and

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A d d i t i o n a l I n f o r m a t i o n ( c o n t . )

• Not agree to settle the action, if any such settlement impacts uponthe rights of the owner of the land under the lease of such premises,without the purchaser’s consent, which consent shall not beunreasonably withheld.

On the basis of the advice from our solicitor and counsel we do notbelieve the litigation instituted by HRC companies will have any materialimpact on Investors (even if the HRC companies are successful againstthe Vendor).

For our part, we view HRC as a desirable tenant and will endeavour toensure a good relationship with them.

We have taken the further step that in the forecasts in Section 6, we havediscounted the cash flow forecast by our valuer to provide a contingencyin this regard which we believe is more than a reasonable provision in allthe circumstances.

1 4 . 5 C u s t o d i a n

The role of the Custodian is to hold the property of the DPI and to dealwith such property only as instructed by the Manager and provided suchinstructions are in accordance with the provisions of the Constitution. TheCustodian must exercise diligence and vigilance in carrying out its duties.The Custodian will hold evidence and documents of title and the assets ofthe DPI in safe custody except for titles held by the lender as security forthe Loans.

The main duties and obligations of the Custodian are:

• To hold title to the Real Estate as nominee for the Owners;

• To hold the Fund upon and subject to the terms and conditionscontained in the Constitution and in that regard to facilitate thedistribution of the surplus cash flow by the Manager;

• To comply with instructions from the Manager in relation toinvestment of the Fund; and

• To act continuously as Custodian until the Fund is determined or ithas retired or been removed from office in accordance with theprovisions of the Law and the Custodian Agreement.

Remuneration of the Custodian

The Custodian will be entitled to receive an annual fee for acting asCustodian at the rate of 0.05% p.a. of the Gross Value of Assets underManagement (as defined in the Constitution) paid quarterly in arrears. TheCustodian is entitled to be paid or reimbursed out of the Fund for all costs,charges, outgoings and expenses properly incurred by it pursuant to theadministration of the DPI and the Trust and which are properly incurredin relation to the performance of its duties as Custodian of the DPI andthe Trust.

R e t i rement and Removal of the Custodian

The Custodian has covenanted with the Manager that it will resign ascustodian in any of the following events:

• If it ceases to carry on business;

• If it is placed in liquidation, other than for the purposes ofamalgamation, reconstruction or a purpose of a similar kind, or inofficial management;

• Where a receiver, or a receiver and manager is appointed in relationto the property of the Custodian and is not removed or withdrawnwithin 30 days of the appointment;

• If the Custodian is not, or is no longer, empowered to act as acustodian; or

• If the Manager gives not less than thirty (30) days notice of itsintention to appoint a new custodian.

The Custodian may retire upon the expiration of three months (or suchlesser period as the Manager may agree) notice to the Manager.

1 4 . 6 M a n a g e r

The role of the Manager is to act as the Responsible Entity for the DPI. Inthis role the Manager will have all the rights, powers and duties as listedin the Constitution. The Manager has covenanted to carry out its dutiesand exercise its powers under the Constitution in the best interests of allOwners and in a proper and efficient manner.

The main duties and obligations of the Manager are:

• To manage, improve and enhance the Real Estate and to do allmatters incidental thereto;

• To appoint and instruct an Approved Valuer from time to time asnecessary to ensure a proper valuation of the Real Estate;

• To keep, or cause to be kept, proper books of account in relation tothe Real Estate and the Fund and to the Lots;

• To cause the accounts of the Real Estate and the Fund to be auditedat the end of each financial year and to ensure that a statement ofthe accounts of the Real Estate and the Fund is given to each Ownernot more than 90 days after the end of the financial year to whichthe accounts relate;

• To comply with any directions given to it at a meeting of theOwners convened pursuant to the terms of the Constitution providedsuch directions are consistent with the Constitution or theCorporations Law;

• To facilitate the distribution of the surplus cash flow to theInvestors;

• To collect and receive all income and capital receipts arising fromthe Real Estate and the Fund;

• To forward to each Owner for each financial year a statement of thatOwner’s tax position in relation to the DPI; and

• To insure and keep insured in the name of the Custodian or with theinterest of the Custodian noted on the policy, the Real Estate to itsfull insurable value on a replacement and reinstatement basis andits rents and profits against loss or damage and to maintain an up-to-date Register of Owners.

Remuneration of the Manager

The Manager will be entitled to receive the fees set out in Section 7.4.The Manager is also entitled to be paid or reimbursed out of the Fund forall costs, charges, outgoings and expenses of the DPI and the Trust,including commissions (other than as referred to in Section 14.16),procuration fees, agents’ fees, brokerage, legal fees, project management

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fees on supervision of capital works, accounting fees and expenses, bankcharges, stamp duty, taxes, government charges, auditor’s fees, insurancefees and any other costs which it might properly incur in relation to theperformance of its duties as Manager of the DPI and the Trust.

R e t i rement of the Manager

The Manager may retire at any time in accordance with the Law and theConstitution. In addition, the Law and the Constitution provide that theManager must retire:

• Following an extraordinary resolution of the Members requiring it todo so;

• If it goes into liquidation; or

• If it ceases to hold a Dealer’s Licence.

If the Manager retires as Responsible Entity and is replaced by a newResponsible Entity, the new Responsible Entity must cause the RealEstate to be valued forthwith by an Approved Valuer. The Manager willbe entitled to receive a fee of 2% of such value within 7 days of the saleof the Real Estate.

1 4 . 7 O w n e r s

Limited Liability of the Owners

The Manager has covenanted in the Constitution that the Owners will notbe liable to them or any creditors of the DPI in excess of the amountssubscribed. The question of liability of a beneficiary for claims againsta trustee in an arrangement such as this has not however been finalisedin law.

Meetings of Owners

The Constitution contains detailed provisions relating to the conveningand conduct of meetings. The Custodian or the Manager may at any timesummon a meeting of Owners for such purposes as they see fit. On therequisition in writing of either 50 Owners or 5% in number (whichever isthe less), the Manager will convene a meeting of Owners.

Vo t i n g

At a meeting, and on a show of hands, each Owner present in person, orby proxy, shall have one vote. On a poll, in relation to each Lot, Ownerswill be entitled to one vote for each $5,000 of equity originally subscribed.

Register of Owners

The Manager will maintain an up-to-date Register of Owners which willinclude the details of the Owners and their Lots. The Register will beavailable for inspection at the registered office of the Manager.

1 4 . 8 A u d i t o r

The Auditor of the DPI is Alexander & Spencer, Chartered AccountancyFirm of Level 12A, 440 Collins Street, Melbourne which is a registeredCompany Auditor appointed by the Manager.

The role of the Auditor is to perform an audit of the accounts of the DPIas required by the Constitution and the Corporations Law and provide anopinion thereon.

The Manager may at any time remove the Auditor, subject to theCorporations Law. The Auditor may re t i re upon written notice to theManager and only after consent has been obtained by the Auditor from ASIC.

1 4 . 9 Authorised Investments

It is the intention of the Manager that the funds of the DPI shall beinvested in the property referred to in this Prospectus. The Constitutionalso permits funds to be placed or invested in:

• Deposits (whether secured or unsecured) with a bank, bills ofexchange, certificates of deposit and negotiable certificates ofdeposit issued by a bank and bills of exchange or similarinstruments accepted and endorsed by a bank; and

• Deposits with, and promissory notes, debentures, debenture stock,stock, inscribed stock, shares, bonds, bills or similar securitiesissued by, the Commonwealth of Australia or any Australian State orTerritory or any semi-governmental body or statutory authority whererepayment of the principal and interest is guaranteed in each caseby the Commonwealth Government or by a State or Territor yGovernment.

1 4 . 1 0 B o rro w i n g sIn accordance with the terms of the Constitution and the CorporationsLaw, the Manager may arrange loans to the Owners to finance their Lotsin the Real Estate and the Fund. The Lots of the Owners in the Real Estateand the Fund shall be charged as security for such loans, provided that theliability of the Custodian, Manager and Owners under such mortgage andcharge shall be limited to the value of the Real Estate and the Fund. Itshall be a condition of such loans that the Custodian, Manager andOwners shall not be personally liable beyond the Contributions. Asfurther security for the loans the Manager shall procure for the financiera mortgage of the Real Estate and a charge over the Fund.

Each Owner, on application for a Lot, authorises the Manager to borrowon his or her behalf and grants to the Manager a limited Power ofAttorney in the terms set out on the back of the Application Form. Theborrowings shall be arranged so that each Owner’s percentage share ofthe borrowings shall be the same as his or her percentage share of theDPI as stated in the Register of Owners.

The Manager shall not arrange any loans which at the time of draw downbring the total loans to more than 66.6% of the value of the Real Estate.Where loans are used for capital improvements the value of the RealEstate shall be the assessed value of the Real Estate upon completion ofthe said capital improvements.

The Manager is not authorised to enter into any financing arrangementwhich will have the effect of making the Custodian, the Manager, or anyOwners liable for payment to the financier of any amount in excess of thevalue of the Real Estate and the Fund.

Whilst the Manager plans to raise equity of $45.5m and to haveborrowings of $51.75m, the Manager reserves the right to vary theamount raised in equity by no more than 10% provided however that thetotal sum initially raised from equity and borrowings shall be $97.25m.

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A d d i t i o n a l I n f o r m a t i o n ( c o n t . )

1 4 . 1 1 Income and Distribution

The Manager is responsible for collecting the income and is responsiblefor the distribution of the income of the DPI.

The Owners are entitled to the income derived during any financial yearin proportion to the contributions which they have made to the DPI.

The Manager shall distribute surplus cash flow to the Owners quarterly,for the quarters ending on the last days of September, December, Marchand June in each financial year. The first payment will be made inaccordance with the provisions set out in Section 6.2. Each subsequentpayment will be made three months thereafter. Surplus cash flowrepresents, for each accounting period ending on 30 June of each year,the revenue from rent and recovery of outgoings, interest income andinterest derived from any other sources relating to this investment less allexpenditures including capital expenditures paid.

Within 90 days of the end of each financial year, the Manager shall sendto each Owner a statement of the accounts of that financial year inrelation to the Real Estate and the Fund and that Owner’s Lot and a copyof the Auditor’s report on the statements.

1 4 . 1 2 Duration and Te rm i n a t i o n

This DPI commenced on the date on which this Prospectus was registered(the Commencement Date) and must terminate before the end of 10 yearsfrom the Commencement Date (the Termination Date), but may terminateearlier in certain circumstances outlined in the Constitution, including:

• If the Manager retires or is removed as Responsible Entity and is notreplaced within the time required by the Law; or

• If the Owners so resolve by special resolution.

Upon termination of the DPI, the Manager will realise all assets of the DPIand will, after repayment of loans and deduction of all fees provided forby the Constitution, distribute the proceeds, in one or more distributions,to the Owners in proportion to the contributions which they have made tothe DPI, subject to retaining sufficient funds to meet all costs, chargesand expenses. Such proceeds shall be distributed within 2 months afterthe settlement of the sale of the Real Estate.

Notwithstanding the above, the DPI may continue if both:

• The Manager deems it to be in the best interests of all Owners; and

• Each Owner who wishes to exit the DPI for the whole or a part ofhis or her investment is able to exit the investment at a value whichis fair, transparent and independently established and reflects asale, at market, of the property.

1 4 . 1 3 Sale of the Real Estate

Sale of the Real Estate is prohibited other than:

• At the end of the Period of Investment;

• Subject to prior approval of the Investors pursuant to theConstitution; or

• If the Manager believes it is in the best interests of the Owners tosell all or part of the Real Estate.

1 4 . 1 4 Amendment of the Constitution

The Manager may alter the Constitution if it is of the opinion that thealteration is necessary to comply with any legal requirement or to bettereffect the operation of the DPI, or to correct a manifest error, provided thealteration is not or will not become prejudicial to the rights of the Owners.

1 4 . 1 5 A c c o u n t s

The Manager will prepare the accounts of the DPI as required by the Lawand these will be forwarded, together with an Auditor’s report and adistribution statement, to each Owner before the expiration of 90 daysfrom the end of the relevant accounting period.

1 4 . 1 6 C o m m i s s i o n

The Manager may pay commissions to persons in respect of asubscription pursuant to this Prospectus.

Maximum Rate

The maximum rate of commission payable in respect of a subscriptionpursuant to this Prospectus, other than in relation to underwriting, will notexceed 3% of each subscription.

An ongoing service fee may also be payable of up to 0.25% p.a. of eachsuch subscription for a maximum of the next six years ie. a maximumof 1.5%.

If this Prospectus is underwritten, partially or fully, then the Manager maypay an additional commission to any underwriter of 1% of the amountwhich is underwritten, and may extend the period for payment of theservice fee of 0.25% p.a. for an additional 2 years i.e. to 8 years.

All of the above fees and commissions are paid by the Manager fromits fee.

1 4 . 1 7 I n s u r a n c e

The Manager will take out insurance cover for the properties, workerscompensation and public liability.

The property will be the subject of comprehensive insurance policieswhich cover all usual insurable risks including earthquakes. Coverageincludes replacement cost of the building, machinery breakdown, publicliability and loss of rent in the event of disruption to tenants due todamage caused by an insurable event.

1 4 . 1 8 F o reign Investment Restrictions

The Foreign Acquisitions & Takeovers Act 1975 (the Act) regulates foreigninvestment in Australia. Where a proposed investment in a DPI wouldresult in a foreign entity acquiring an “interest in Australian urban land”then that foreign entity must notify the Commonwealth Treasurer.

Accordingly, foreign Investors should obtain independent legal advice inrelation to the application of the Act to their own circumstances beforeany investment decision is made.

Primary rules governing the taxation of non-residents provide that non-residents are liable to Australian tax on all items of income which havetheir source in Australia.

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1 4 . 1 9 D i s c l o s u re of Intere s t s

Custodian and Directors of the Custodian

At the date of this Prospectus and throughout the preceding two yearperiod neither the Custodian nor any Directors of the Custodian has or hadany interest in the promotion of or in the DPI other than the remunerationto which it is entitled as Custodian (see Section 8).

M a n a g e r

At the date of this Prospectus and throughout the preceding two yearperiod the Manager had no interest in the promotion of or in the DPI otherthan the remuneration to which it is entitled as Manager as detailed inSection 7.4.

The Manager and/or interests associated with the Manager willsubscribe at least $500,000 to this DPI.

R e c o v e ry of Expenses

The Manager and/or its associates will be reimbursed for expenses whichit has already incurred and which it has paid or will pay for engineering,fire, lifts and hydraulics, experts’ and consultants’ reports, survey reports,structural reports, accountant’s reports, quantity surveyors’ reports, retailexperts’ reports, soil contamination reports, expenses of design, printingand other prospectus publication expenses, valuation expenses and fees,other than to interests associated with the Manager, loan establishmentfees and procuration fees. These expenses are provided for in theacquisition costs (see Section 10).

D i rectors of the Manager

The Directors of the Manager are Denis Richard Page, Julius Colman,Anthony Francis Stewart, Allan Hume Reid, Glenn Richard Batchelor,Anthony Gerard Torney, Peter Raymond McGrath and George PeterColman. At the date of this Prospectus and throughout the preceding twoyear period, their interests relevant to this DPI were as follows:

All Directors of the Manager except Denis Richard Page and George PeterColman are directors of Dunecorp Pty Ltd, a company associated with theManager which has entered into the agreement to purchase the RealEstate. Dunecorp Pty Ltd, as required, will nominate, substitute or assignthe agreement to the Custodian on or prior to the Completion Date andwill have no further interest in the DPI save as an Owner. Dunecorp PtyLtd receives no fees in relation to the DPI other than interest on thedeposit monies paid.

Neither the Manager, the Directors, nor any interests associated with anyof them, will receive any part of loan fees, establishment fees orprocuration fees on the purchase.

E x p e rt s

As at the date of this Prospectus and throughout the preceding two yearperiod none of the experts listed in Section 14.20 has or had any interestin the promotion of or in the Real Estate, except as follows:

Jebb Holland Dimasi - fee of $21,500 for demographic and retaileconomic report

Herron Todd White - fee of $30,000 for valuation of theParadise Centre

1 4 . 2 0 Consents of Expert s

The following experts have given their written consent to the issue ofthis prospectus with the information and references as stated, in the formand context in which they appear in this Prospectus, and have notwithdrawn such consent prior to the delivery of this Prospectus forregistration to ASIC:

Jebb Holland Dimasi - information contained in Sections 1.2, 5.2, 5.4,5.7 and 5.8.

Herron Todd White - the Summary of Valuation and the referencesto the Summary of Valuation in Sections 5.5, 6.2(Notes 2 and 15) and 11.

1 4 . 2 1 Inspection of Documents

A true copy of the following documents will be available for inspectionduring normal business hours free of charge at the registered offices ofthe Manager:

• The Constitutions, Custodian Agreements and Compliance Plans ofthe DPI and the Trust mentioned in Section 13.10 and Section 14.2;

• The Option Agreement mentioned in Section 14.3;

• The Leases mentioned in Section 14.3;

• The Car Parking Management Agreement in Section 14.3;

• The Manager’s Dealers Licence mentioned in Section 7;

• The Reports of Experts mentioned in Section 14.20; and

• The Consents of Experts mentioned in Section 14.20.

1 4 . 2 2 D i s c l a i m e r s

Other than as required by law, no responsibility is taken by the Manageror any of the Experts mentioned in Section 14.20 for any statement madein relation to the DPI, other than those statements contained in thisProspectus.

Neither the Manager, the Custodian nor any Expert (or any of theirsolicitors or advisers) gives any guarantee with respect to the return ofany investment, any tax deduction with respect to the investment, nor theperformance of the investment generally.

In relation to the property to be acquired by the DPI and its valuation, afterdue enquiry regarding the interval commencing on the date of valuation tothe date of this Prospectus and save as disclosed in the Prospectus, theManager is not aware of any circumstances that in its opinion, materiallyhave affected or will affect the trading or profitability of this Prospectus.

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This Prospectus in the form in which it appears has been duly signed on the 3rd day of March 2000 by the Directors whose names appear above.

The Directors of the Manager have authorised the issue of this Prospectus by MCS Property Limited.

The Manager is the holder of a Dealer’s Licence issued by ASIC. The Dealer’s Licence permits it to be the Responsible Entity of andoperate schemes which invest in Direct Real Property.

The Directors of the Manager are Denis Richard Page, Julius Colman, Anthony Francis Stewart, Allan Hume Reid, Glenn Richard Batchelor,Anthony Gerard Torney, Peter Raymond McGrath and George Peter Colman who are experienced in the fields of real estate acquisitionand development, sales, leasing, management, the legal aspects of property acquisition, disposal, structuring, corporate governance,capital structures and financial modelling.

To the best of their knowledge and belief the information contained in this document is true and nothing is omitted which is likely tomaterially affect the importance of the information provided.

The Directors of MCS Property Limited report that, as at the date hereof, after due enquiry by them and except as otherwise set out inthis Prospectus, they have not become aware of any circumstance that, in their opinion, has materially affected or will affect the tradingor profitability or the value of the assets to be acquired by this DPI.

Signed by each Director of the Manager.

Denis Richard Page Julius Colman Anthony Francis Stewart

Allan Hume Reid Glenn Richard Batchelor Anthony Gerard Torney

Peter Raymond McGrath George Peter Colman(By his agent authorised in writing (By his agent authorised in writing

Glenn Richard Batchelor) Julius Colman)

G l o s s a r y

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Applicant A person who submits an Application FormApplication Form The Application Form attached to the ProspectusApplication Monies The money payable by an ApplicantASIC Australian Securities and Investments CommissionASX Australian Stock ExchangeCBA Central Business AreaCertificate of Ownership Certificate issued to each Owner or each Unit Investor identifying that Owner’s Lot in a DPI or the Unit Investor’s

Unit in a Trust as the case may beCGT Capital Gains TaxCIV Collective Investment VehicleCompliance Plan Compliance Plan of the Manager for the DPI or the Trust (as applicable) and registered by ASICConstitution Constitution for the DPI or the Trust (as applicable) between the Manager and the Original Participants

(as amended) and registered by ASICCorporations Law Corporations Law of VictoriaCustodian Sandhurst Trustees Limited (ACN 004 030 737)DDS Discount Department StoreDirect Property Investment The managed investment scheme known as the MCS Paradise Centre Direct Property Investment established

by the Constitution (but not the Trust)DPI Direct Property InvestmentExempt Market A regulated market for direct property interestsFund Assets of the DPI other than the Real Estate, which may from time to time hereafter be held by the Custodian

or the Manager (other than the Custodian’s and Manager’s fees and expenses) or on their behalf for the benefitof the Owners

GLA Gross Lettable AreaIRR Internal Rate of Return. This is an expected annualised return to Investors over the forecast period of 7 years

which is derived from a combination of the forecast distributed income and capital returns, given a definedinvestment level

Investor OwnerIssue Capital raisingJHD Jebb Holland DimasiLoan The loan arranged for each Owner pursuant to the terms of this ProspectusLot The percentage share of an Owner in the DPIListed Property Trust A property trust listed on the ASXMajors Full scale supermarkets and DDSsManager MCS Property Limited (ACN 051 908 984)MIA Managed Investments ActNationals Retailers which have a representation in two or more States of AustraliaOwner The holder of a Lot in the DPI who is registered as an Owner under the provisions of the ConstitutionPeriod of Investment The period between the commencement and the termination of the DPIProspectus This ProspectusRalph Report The report prepared for the Federal Government by the Ralph CommitteeReal Estate The Paradise Centre

Any associated, related or adjoining properties, easements or interests in land, the acquisition of whichthe Manager and the Custodian reasonably believe will be in the best interests of the Owners provided,however, that the value of all such acquisitions will not exceed 15% of the value of the Paradise Centre

Subscription The amount set out on the Application Form and accepted by the ManagerTrust The managed investment scheme known as the MCS Paradise Centre Unit Trust established by the Constitution

(but not the DPI)Unit A $1 Unit in the MCS Paradise Centre Unit TrustUnit Trust Investor The holder of Units in the TrustUs The ManagerValuers Herron Todd WhiteWe The ManagerYield Net income divided by purchase price excluding costs associated with purchaseYou The Owners

S E C T I O N

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2

H o w t o A p p l y

S E C T I O N

17 For Direct Investors

Applications may be made only on the YELLOW Application Formattached to this Prospectus. No allotment pursuant to thisProspectus may be made later than 12 months from the date ofthis Prospectus.

If you have any queries on how to complete an ApplicationForm or wish to obtain additional copies of this Prospectusplease telephone Madeleine McGrath or Glenn Batchelor on(03) 9639 4511 or fax (03) 9639 4501.

The Manager has the right to close the subscription lists at anytime. Further the Manager has the right to accept or reject anysubscription in whole or in part.

Applicants wishing to apply for a Lot in the DPI should fill out theYELLOW Application Form.

PLEASE NOTE that all successful Applicants in the DPI willbecome parties to the Loans (see Section 9).

Minimum and Maximum Subscription

You may invest an amount of $20,000 or more, however theManager may prohibit any Investor from holding or controllingmore than 15% of the DPI at any time.

Signing the Application Form

B e f o re signing the Application Form, you must read thisProspectus.

The Application Form must be signed by you personally, or undercompany seal or by an attorney.

Joint Applications must be signed by each Applicant. JointApplicants will be assumed to be joint tenants unless otherwisespecified.

If signed by an attorney, the relevant original power of attorney(including the power to nominate another attorney) must besubmitted with this Application Form for noting and return.

If signed under company seal, the Director(s) and/or Secretaryattest that the common seal was affixed in accordance with thecompanyís Articles of Association.

Tax File Numbers

Collection of tax file numbers is authorised by tax law and thePrivacy Act 1988. You do not have to advise us of your tax filenumber or exemption, but if you do not, tax may be taken out ofthe quarterly payments at the top personal marginal rate plus theMedicare levy.

D i rect Cre d i t s

MCS provides a direct credit facility. Should you wish to takeadvantage of this facility, please complete Section 6 in theApplication Form.

Cheques and Application Form s

Cheques must be made payable to:“Sandhurst Trustees Limited - MCS Paradise Centre DPI”.

Completed Application Forms and cheques must be sent to:

MCS Paradise CentreC/- Computershare Registry Services Pty LimitedGPO Box 2975EEMELBOURNE VIC 3001

or

MCS Paradise CentreC/- Computershare Registry Services Pty LimitedLevel 12565 Bourke StreetMELBOURNE VIC 3000

S E C T I O N

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For Unit Trust Investors

For Investors such as superannuation funds who may not wish toborrow in their own right, applications should be for Units in theTrust and applicants should fill out the GREEN Application Form(please read Section 13).

Applications may be made only on the GREEN Application Formattached to this Prospectus. No allotment pursuant to thisProspectus may be made later than 12 months from the date ofthis Prospectus.

If you have any queries on how to complete an Application Formor wish to obtain additional copies of this Prospectus pleasetelephone Madeleine McGrath or Glenn Batchelor on (03) 96394511 or fax (03) 9639 4501.

The Manager has the right to close the subscription lists at anytime. Further the Manager has the right to accept or reject anysubscription in whole or in part.

Minimum and Maximum Subscription

You may invest an amount of $20,000 or more, however theManager may prohibit any Investor from holding or controllingmore than 15% of the DPI at any time.

Signing the Application Form

B e f o re signing the Application Form, you must read thisP rospectus. The Application Form must be signed by youpersonally, or under company seal or by an attorney.

Joint Applications must be signed by each Applicant. JointApplicants will be assumed to be joint tenants unless otherwisespecified.

If signed by an attorney, the relevant original power of attorneymust be submitted with this Application Form for noting andreturn.

If signed under company seal, the Director(s) and/or Secretaryattest that the common seal was affixed in accordance with thecompanyís Articles of Association.

Tax File Numbers

Collection of tax file numbers is authorised by tax law and thePrivacy Act 1988. You do not have to advise us of your tax filenumber or exemption, but if you do not, tax must be taken out ofthe quarterly payments at the top personal marginal rate plus theMedicare levy.

D i rect Cre d i t s

MCS provides a direct credit facility. Should you wish to takeadvantage of this facility, please complete Section 6 in theApplication Form.

Cheques and Application Form s

Cheques must be made payable to:“Sandhurst Trustees Limited - MCS Paradise Centre Unit Trust”.

Completed Application Forms and cheques must be sent to:

MCS Paradise CentreC/- Computershare Registry Services Pty LimitedGPO Box 2975EEMELBOURNE VIC 3001

or

MCS Paradise CentreC/- Computershare Registry Services Pty LimitedLevel 12565 Bourke StreetMELBOURNE VIC 3000

17

This page has intentionally been left blank.

To meet with the requirements of the Corporation Law, this Application Form must not be handed on unless attached to the Prospectus.

Fill out this Application Form if you want to apply for a Lot in MCS Paradise Centre DPI.

Follow instructions overleaf to complete this Application Form

Print clearly in capital letters using black or blue ink

Lodge your Application Form as soon as possible. This offer is open for a limited time.

I/We apply for a Lot in MCS Paradise Centre DPI.

1 . Total Amount

I/We lodge full application monies: A$ .00

2 . Full Name and Ti t l e ( s )

Individual/Joint Applicant No. 1 - refer overleaf for correct forms or registrable title(s)

Title Given name(s) Surname

Joint Applicant No. 2 or Account Designation




3 . Postal Addre s s

Street Name

Suburb / City State Postcode

4 . Contact Name

Contact Name Home Telephone No. Work Telephone No.

E-mail Address Fax No.

5 . Enter your Tax File Number(s)

6 . Request for Direct Payments of Distribution (optional)

I/We request all future distributions be credited direct to the account detailed below until notified otherwise in writing

Account No. BSB No. Account Name

7 . Cheque Details

Pin your cheque above - Cheques should be crossed Not Negotiable and made payable to ”Sandhurst Trustees Limited - MCS Paradise Centre DPI“ (address overleaf)

Drawer Bank BSB Amount of Cheque


8 . Sign Here

I/We authorise you to act in accordance with my/our instructions set out above

Individual / Joint Applicant 1 Joint Applicant 2 Joint Applicant 3Director 1 Director 2 / Company Secretary Sole Director and Sole Secretary

A p p l i c a t i o n F o r mD i r e c t I n v e s t o r s O n l y

Brokers Code

Adviser

PAGE 5 5

6

Please complete all relevant sections of the Application Form using BLOCK LETTERS

1. Enter the TOTAL AMOUNT of application money payable.

2. Enter the FULL NAME(S) and TITLE(S) of all legal entities that are to be recorded as the registered holder(s). Refer to the Name Standards below for guidance on valid registration.

3. Enter the POSTAL ADDRESS for all communications from MCS Property Limited. Only one address can be recorded.

4. Enter telephone number or e-mail address and a contact person the registry can speak with if they have any queries regarding this Application.

5. Enter the TAX FILE NUMBER(s) (TFN) of the applicants. Where applicable, please enter the TFN for each Joint Applicant. Collection of TFNs is authorisedby taxation laws. It is not compulsory to provide your TFN. However, if you do not provide your TFN tax will be deducted from quarterly payments at the toppersonal rate plus the Medicare levy.

6. Complete this section to have your distribution paid directly into a nominated Australian bank, credit union or building society.

7. Payment must be made in Australian currency.Cheques or bank drafts must be payable to “Sandhurst Trustees Limited - MCS Paradise Centre DPI“ and crossed Not Negotiable.Cheques not properly drawn may be rejected. Cheques will generally be deposited on the day of receipt.

8. You hereby irrevocably nominate MCS PROPERTYLIMITED (“MCS”) (ACN 051 908 984) to be your Attorney (with power to appoint and from time to timeremove a substitute or substitutes) only in accordance with the terms of this Prospectus to borrow on your behalf in proportion to your subscription and tosign any necessary document or instrument in respect of such borrowing and without limiting the generality of the foregoing, MCS is empowered to chargeyour Interest, and if the loan falls due prior to the sale of the Real Estate, to roll it over, discharge it wholly or partly and/or enter into a new loan. MCS hasno authority to put you at risk for any more than the monies you have subscribed. The terms herein shall have the same meanings as given to them in theGlossary contained in the Prospectus.

9. Each Applicant must sign this form. If your units are to be held in joint names, all Applicants must sign in the boxes. If you are signing as an attorney, thenthe power of attorney must have been noted by Computershare Registry Services or a certified copy of it must accompany this form.

Only duly authorised officer(s) can sign on behalf of a company. Please sign in the boxes provided which state the office held by the signatory,ie. director and director, or company secretary and director, or the sole director and sole company secretary.

In signing this Application Form you agree:

1. Your Application is made on the basis that pending completion of the purchase of Paradise Centre, your contribution will be held by the Custodianand will be returned if the purchase does not proceed or if your Application is not accepted.

2. That you have read the Prospectus to which this Application is attached.

3. By signing this form, you agree to be bound by the terms of the Constitution.

4. That the Manager may accept or reject your Application in whole or in part.

5. You acknowledge that none of MCS nor any other person or entity guarantees the value or performance of this investment.

6. That if my Application is accepted, I hereby appoint MCS Property Limited as my Attorney, on the terms set out above in Section 8, to obtain a loanon a non-recourse basis as set out in this Prospectus or any rollover or discharge of that non-recourse loan or the entering into of a new loan.

7. I certify that I will not be holding or controlling more than 15% of this DPI at any time.

Forward your completed Application together with the Application Money to:

MCS Paradise Centre or MCS Paradise CentreC/- Computershare Registry Services Pty Limited C/- Computershare Registry Services Pty LimitedGPO Box 2975EE Level 12, 565 Bourke StreetMELBOURNE VIC 3001 MELBOURNE VIC 3000

Name StandardsNote that only legal entities are allowed to hold interests in this investment. Applications must be in the name of a natural person or natural persons, companyor other legal entity acceptable to MCS Property Limited. At least one full given name and the surname is required for each natural person. The name of thebeneficiary or any other non-registrable name may be included by way of an account designation if completed exactly as described in the example of correctforms of registrable title below:

Type of Investor Correct Form of Registration Incorrect Form of Registration

Individual Mr John Alfred Smith J A SmithUse given names in full, not initials

Company ABC Pty Ltd ABC P/L Use the company’s full title, not abbreviations or ABC Co

Joint Holdings Mr Peter Robert Williams Peter Robert &Use full and complete names & Ms Louise Susan Williams Louise S Williams

Trusts <Sue Smith Family A/C> Mrs Susan Jane SmithUse the trustee(s) personal name(s) Sue Smith Family Trust

Deceased Estates Ms Jane Mary Smith & Mr Frank William Smith Estate of late John SmithUse the executor(s) personal name(s) <Est John Smith A/C> or John Smith Deceased

Partnerships Mr John Robert Smith & Mr Michael John Smith John Smith and SonUse the partners personal names <John Smith and Son A/C>

Long Names Mr John William Alexander Robertson-Smith Mr John W A Robertson-Smith

Clubs/Unincorporated Bodies/Business Names Mr Michael Peter Smith ABC Tennis AssociationUse office bearer(s) personal name(s) <ABC Tennis Association A/C>

Superannuation Funds Jane Smith Pty Ltd Jane Smith Pty Ltd Superannuation FundUse the name of the trustee of the fund <Super Fund A/C>

H o w t o C o m p l e t e t h e A p p l i c a t i o n Fo r m

To meet with the requirements of the Corporation Law, this Application Form must not be handed on unless attached to the Prospectus.

Fill out this Application Form if you want to apply for a Lot in MCS Paradise Centre DPI.

Follow instructions overleaf to complete this Application Form

Print clearly in capital letters using black or blue ink

Lodge your Application Form as soon as possible. This offer is open for a limited time.

I/We apply for a Lot in MCS Paradise Centre DPI.

1 . Total Amount

I/We lodge full application monies: A$ .00

2 . Full Name and Ti t l e ( s )

Individual/Joint Applicant No. 1 - refer overleaf for correct forms or registrable title(s)






3 . Postal Addre s s

Street Name

Suburb / City State Postcode

4 . Contact Name

Contact Name Home Telephone No. Work Telephone No.

E-mail Address Fax No.

5 . Enter your Tax File Number(s)

6 . Request for Direct Payments of Distribution (optional)

I/We request all future distributions be credited direct to the account detailed below until notified otherwise in writing

Account No. BSB No. Account Name

7 . Cheque Details

Pin your cheque above - Cheques should be crossed Not Negotiable and made payable to ”Sandhurst Trustees Limited - MCS Paradise Centre Unit Trust“ (address overleaf)



8 . Sign Here

I/We authorise you to act in accordance with my/our instructions set out above

Individual / Joint Applicant 1 Joint Applicant 2 Joint Applicant 3Director 1 Director 2 / Company Secretary Sole Director and Sole Secretary

PAGE 5 7

A p p l i c a t i o n Fo r m

Brokers Code

Adviser

U n i t Tr u s t I n v e s t o r s O n l y

8

Please complete all relevant sections of the Application Form using BLOCK LETTERS

1. Enter the TOTAL AMOUNT of application money payable.

2. Enter the FULL NAME(S) and TITLE(S) of all legal entities that are to be recorded as the registered holder(s). Refer to the Name Standards below for guidance on valid registration.

3. Enter the POSTAL ADDRESS for all communications from MCS Property Limited. Only one address can be recorded.

4. Enter telephone number or e-mail address and a contact person the registry can speak with if they have any queries regarding this Application.

5. Enter the TAX FILE NUMBER(s) (TFN) of the applicants. Where applicable, please enter the TFN for each Joint Applicant. Collection of TFNs is authorisedby taxation laws. It is not compulsory to provide your TFN. However, if you do not provide your TFN tax will be deducted from quarterly payments at the toppersonal rate plus the Medicare levy.

6. Complete this section to have your distribution paid directly into a nominated Australian bank, credit union or building society.

7. Payment must be made in Australian currency.Cheques or bank drafts must be payable to “Sandhurst Trustees Limited - MCS Paradise Centre Unit Trust“ and crossed Not Negotiable.Cheques not properly drawn may be rejected. Cheques will generally be deposited on the day of receipt.

8. Each Applicant must sign this form. If your units are to be held in joint names, all Applicants must sign in the boxes. If you are signing as an attorney, thenthe power of attorney must have been noted by Computershare Registry Services or a certified copy of it must accompany this form.

Only duly authorised officer(s) can sign on behalf of a company. Please sign in the boxes provided which state the office held by the signatory,ie. director and director, or company secretary and director, or the sole director and sole company secretary.

In signing this Application Form you agree:

1. Your Application is made on the basis that pending completion of the purchase of Paradise Centre, your contribution will be held by the Custodianand will be returned if the purchase does not proceed or if your Application is not accepted.

2. That you have read the Prospectus to which this Application is attached.

3. By signing this form, you agree to be bound by the terms of the Constitution.

4. That the Manager may accept or reject your Application in whole or in part.

5. You acknowledge that none of MCS nor any other person or entity guarantees the value or performance of units, or the level or timing of distributionsin respect of units, or the value or performance of the assets of the Trust.

6. I certify that I will not be holding or controlling more than 15% of this DPI at any time.

Forward your completed Application together with the Application Money to:

MCS Paradise Centre or MCS Paradise CentreC/- Computershare Registry Services Pty Limited C/- Computershare Registry Services Pty LimitedGPO Box 2975EE Level 12, 565 Bourke StreetMELBOURNE VIC 3001 MELBOURNE VIC 3000

Name StandardsNote that only legal entities are allowed to hold interests in this investment. Applications must be in the name of a natural person or natural persons, companyor other legal entity acceptable to MCS Property Limited. At least one full given name and the surname is required for each natural person. The name of thebeneficiary or any other non-registrable name may be included by way of an account designation if completed exactly as described in the example of correctforms of registrable title below:

Type of Investor Correct Form of Registration Incorrect Form of Registration

Individual Mr John Alfred Smith J A SmithUse given names in full, not initials

Company ABC Pty Ltd ABC P/L Use the company’s full title, not abbreviations or ABC Co

Joint Holdings Mr Peter Robert Williams Peter Robert &Use full and complete names & Ms Louise Susan Williams Louise S Williams

Trusts <Sue Smith Family A/C> Mrs Susan Jane SmithUse the trustee(s) personal name(s) Sue Smith Family Trust

Deceased Estates Ms Jane Mary Smith & Mr Frank William Smith Estate of late John SmithUse the executor(s) personal name(s) <Est John Smith A/C> or John Smith Deceased

Partnerships Mr John Robert Smith & Mr Michael John Smith John Smith and SonUse the partners personal names <John Smith and Son A/C>

Long Names Mr John William Alexander Robertson-Smith Mr John W A Robertson-Smith

Clubs/Unincorporated Bodies/Business Names Mr Michael Peter Smith ABC Tennis AssociationUse office bearer(s) personal name(s) <ABC Tennis Association A/C>

Superannuation Funds Jane Smith Pty Ltd Jane Smith Pty Ltd Superannuation FundUse the name of the trustee of the fund <Super Fund A/C>

H o w t o C o m p l e t e t h e A p p l i c a t i o n Fo r m

D i r e c t o r y

M a n a g e r

MCS Property LimitedACN 051 908 984Registered Office

Level 28, Collins Place55 Collins Street

MELBOURNE VIC 3000Tel: (03) 9639 4511Fax: (03) 9639 4501

E-mail: [email protected]: www.mcsproperty.com.au

C u s t o d i a n

Sandhurst Trustees LimitedACN 004 030 737

Principal Office406 Collins Street

MELBOURNE VIC 3000

A u d i t o r

Alexander & SpencerRegistered Office

Level 12A, 440 Collins StreetMELBOURNEVIC 3000

M CS PROPERTY LIMITED

LEVEL 28 , COLLINS PLACE, 55 COLLINS STREET

MELBOURNE, VICTORIA 3000 . TE LEPHONE (03) 9639 4511