PRIMETIMENEWSDECEMBER 2018

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Message from the Directors

With year end fast approaching we take this opportunity to reflect on 2018 and the year ahead.

On a positive note, we began to see an improvement in the economic conditions in both Western Australia and Queensland with a resurgence in the mining sector. Westpac are forecasting that the RBA will keep the cash rate on hold in 2019 and 2020 and note bright spots in the economy as being infrastructure, service exports, population growth and the lower AUD. Whist the cash rate is forecast to remain unchanged, rising global bond yields and lending rates have the potential to affect real estate yields and this might create buying opportunities for Primewest in the Australian commercial property market.

On the acquisition front, whilst we remained cautious throughout the year, we were still able to acquire some high quality assets with stable income returns and below their replacement cost. We continue to try and actively identify suitable acquisitions and believe that the continued tightening around bank lending will potentially create further investment opportunities for us next year. It is also our intention to continue to look to acquire quality, well located sites to develop for retail, large format retail and office uses to provide enhanced returns for investors.

On the banking front we are pleased to report that we continue to enjoy strong support from all of our lenders, comprising all of the major banks together with a number of the second tier lenders. As a consequence, this will enable us to continue to actively source quality new investment opportunities in the knowledge of increased capacity and support from a lending perspective.

In July this year we established the Primewest Diversified Income Trust No 3 with the initial acquisition of the dominant Red Hill Homemaker LFR (Large Format Retail) Centre in Rockhampton for $38 million. This is a well presented and modern LFR centre which is anchored by The Good Guys and BCF, with 19 other LFR tenants and complemented by six service retailers. We were then able to secure two further assets for this Trust, being 1413-1423 Albany Highway, Cannington and Yamanto Shopping Village and LFR Centre. Both of these additional assets were strategically located on prominent sites and provided a diversified income return across sectors, tenants and locations, together with capital appreciation potential. This Trust will return a monthly cash return based upon 7.25% in its first year, in line with our forecast return on equity.

We are pleased to report that the Primewest Exchange Tower Trust together with the other 50% co-owners, AMP, has recently sold 100% of the Exchange Tower office building to an offshore Sovereign Wealth Fund for a price of $326 million. Our 50% interest was acquired in March 2016 for $113.5

million and together with AMP we embarked on a strategy to reposition the asset through letting up the substantial vacancy and implementing a comprehensive capital works program. We believe that the sale price for our 50% interest at $163 million represents a good outcome for our investors and it is worth noting that our most recent valuation at 30 June 2018 was $153 million.

On the staff front, the existing team has been very stable but we were pleased to welcome Iskandar Alias into the Accounting Team. However, on a sad note, Brian Millmore, who had been our part time Compliance Officer for the last 15 years, passed away unexpectedly in September at the age of 72. We were very saddened with his loss, as he had been very much part of our Primewest family and we pass on our best wishes and thoughts to his wife Rose and his children.

Primewest continues to focus on our Community initiatives. We helped run and were a major sponsor with Lexus of Perth with another highly successful Fathering Project Community Charity Ride raising over $40,000 for this wonderful charity. We were also delighted to be a sponsor for the inaugural Girls In Property event which proved very successful and was enjoyed by a large number of young ladies from Shenton College.

We would like to take this opportunity to wish you and your family a safe and happy festive season and a happy new year.

Primewest Rockhampton

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NEW ACQUISITIONS

Primewest Diversified Income Trust No 3.

Primewest recently launched the Primewest Diversified Income Trust No 3, a multi-asset trust which comprises three high quality assets located in WA and QLD across the retail and LFR sectors. Primewest initially acquired a seed asset, Red Hill Homemaker Centre, QLD, a high profile LFR Centre situated in Rockhampton’s regional centre.

The second asset, Yamanto Shopping Village and LFR Centre located in Ipswich, QLD, is a dominant neighbourhood centre in a high traffic growth corridor with significant surplus land and growth potential. The centre is anchored by Woolworths, Super Amart and McDonald’s complemented by 26 retail, service and medical tenants.

Primewest are currently renegotiating directly with Woolworths to reset and extend their lease in addition to significant tenant capital works.

The third and final asset, 1413-1423 Albany Hwy, Cannington is strategically positioned diagonally opposite one of Perth’s largest shopping centres, Westfield Carousel and a newly constructed Bunnings superstore. During due diligence, Primewest were able to secure national retailers, Toymate and Baby Bunting and increased the occupancy rate from 38% to 100% and increased the WALE to 6.2 years.

The ex-Toys ‘R’ Us tenancy was pre-committed during the due diligence period to Baby Bunting and Toymate.

We are pleased to confirm that the lessor works are now complete; Toymate commenced trading on 10th November 2018 and Baby Bunting anticipate opening for trade in December 2018. We were also aware prior to acquiring the asset that New Idea Furniture had exercised an early lease break clause that resulted in the lease expiring on 31st July 2019. The 1,164 sqm tenancy is currently being offered for lease and we are confident of attracting another strong national retailer to the site given the strong retailers adjacent and the favourable city centre zoning.

COMMUNITY

Girls in Property

In October, the Property Council of Australia hosted its first Girls in Property Program. Attended by 52 year nine students from Shenton College, the event aims to increase awareness and introduce young women to the various career pathways available in the property sector. Along with various industry speakers, panellists and mentors, Primewest was instrumental in providing the support needed for a successful event.

1413-1423 Albany Hwy, Cannington

STAFF PROFILE

responsible for managing the financial affairs of the company’s residential and commercial portfolio nationwide. His time at Peet saw him gain valuable experience in property planning, analysis and project management.

Iskandar AliasProperty Accountant

Iskandar joined the Primewest Team as a Property Accountant in August 2018. A qualified chartered accountant, Iskandar has had experience working in the engineering, banking and property sectors.

Prior to joining Primewest, Iskandar worked for Peet Limited where he was

DEVELOPMENTS

Montario Quarter

Following a protracted design review process with the State Architect’s Office design review panel (DRP), Primewest is pleased to confirm endorsement was achieved from the DRP in October. Montario was awarded ‘design excellence’ which delivers the site an additional 35% plot ratio. The Montario submission also received conditional endorsement from the Montario Estate precinct architect, allowing the project to be formally submitted to the Department of Planning, Land and Heritage (DPLH) in November. The development is currently out for advertising, with approval anticipated for early February 2019.

The final unit yield for the development has achieved 157 apartments, being a mix of one, two and three-bedroom apartments with a focus on inter-generational living. The commercial offer

delivers 1 supermarket along with 14 speciality tenancies and 143 car bays. There is a strong focus on securing retailers and restaurateurs who will foster a community hub and activated focal point for the development and estate.

Sales marketing for Montario is anticipated to commence in April 2019 following DPLH approval and final cost analysis.

COMMUNITY

Fathering Project Community Bike Ride

The annual Fathering Project Community Bike Ride was once again a successful event. Held on 3rd November, the 63km ride started at Lexus of Perth, and ended with a well deserved breakfast at the Esplanade Hotel in Fremantle. With generous support from JLL, NAB, Deloitte and Rydges, Primewest alongside Lexus of Perth were able to raise over $40,000.00, which will be applied to the various school programs implemented by the Fathering Project. We look forward to continuing our support next year.

Level 1, 307 Murray Street, Perth WA 6000 GPO Box H555, Perth WA 6841

Tel: +61 8 9321 7133 Fax: +61 8 9321 7144 Email: enquiries@primewest.biz

CONTACT US

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LEASING UPDATE

2–8 Gauge CircuitPrimewest has leased the ex-Kent building to Warpforge, a group who are leading the way with 3D printing technology. We have also successfully negotiated a five year lease extension of the 16,200 sqm Bureau Veritas building.

616 St Kilda RoadWe have agreed a new eight year lease to Jett’s Fitness commencing December 2018 for 530 sqm on the ground floor.

619 Murray StreetWe have secured The Australian Federal Police for a further 12 month lease extension pushing their lease expiry out to 28 February 2021.

Belmont CitiOn the back of a huge opening six months to this calendar year, we have leased two shops to a new bakery and renewed leases with the newsagent and nail salon.

Brassall Shopping CentreWe successfully negotiated with Woolworths to extend their lease early for a further five years from 30 June 2028 through to 30 June 2033. We also leased a vacancy at the centre committing Blooms Hearing to lease shop 5 for five years from January 2019.

Bunbury CentrepointWe are pleased to report that we recently leased larger shops to both OPSM and Specsavers as well as renewing the Target lease. In addition, an external tenancy has been leased to Fairfax as a local newspaper publishing office.

Cottesloe CentralWe are delighted to announce that in the last 12 months we have secured Ray White real estate and a ballet/dance school. We have also renewed leases with Puremoves, Caffissimo, Celebrations, Lifecare Physio and Riverstone.

Dernancourt Shopping CentreWe have secured United Communities to lease shop 9 for three years commencing 19th December 2018.

Edgeworth PlazaThe leasing of the redeveloped Building B was completed in August with the leasing of the entire first floor area to an established engineering firm. This converted storage and caretaker residence was transformed into high grade office space, now generating fantastic income and providing a much better activation of this part of the centre.

Joondalup HouseWe agreed a new five year lease to NDIS commencing February 2019 for a 600 sqm vacancy located on level 2.

Lisarow Shopping CentreIn the past 12 months we secured a new pizzeria and oversaw the renewal of both the bakery and the café tenancies.

Port DouglasWe agreed a lease renewal with Port Douglas gym to remain at the centre for a further five years commencing 1st December 2018.

Port Pirie PlazaWe renewed Sanity Music for a further two years from October 2018.

Primewest Auburn MegamallWe have successfully negotiated a seven year deal for Bed N Dreams. Oak Furniture have relocated and we expanded their tenancy and extended their lease for a further six years. Enhanced Furnishings has been retained on a three year term.

Primewest RutherfordGenesis Fitness, the rear tenant, has been secured for an extended term of 10 years.

QuadrantWe are pleased to announce that Jadestone Energy has been secured for a full floor at Quadrant totalling 1,094 sqm on market terms. The transaction is a very positive outcome due to saving the Trust significant expenditure to makegood the existing fitout which was taken on an as is where is basis.

South CentralWe agreed to downsize and relocate Furniture Bazaar into a 1,204 sqm tenancy from their existing 3,196 sqm tenancy on a five year lease commencing October 2018. We subsequently agreed with Freedom Furniture to lease 2,331 sqm of shop 10 and Early Settler Recollections to lease the residual 865 sqm. We committed Freedom to ten years and Early Settler Recollections to seven years, both commencing November 2018. We also successfully negotiated with The Good Guys to renew their lease for seven years commencing November 2018.

West GosfordWe have secured Subway for a further five years.