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Valuation Report

52-54 Albert Road

South Melbourne, Victoria 3205 File Ref: 8549214

Opteon Property Group Australia

ABN 78 144 732 589

2/490 Frankston-Dandenong Road, Carrum Downs VIC 3201

P 1300 40 50 60 E [email protected]

F 03 5223 2309 W www.opteonsolutions.com

SOLUTIONS WITH EXCELLENCE

Liability limited by a scheme approved under Professional Standards Legislation

VALUATION REPORT

52-54 Albert Road South Melbourne, Victoria 3205

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

Report Purpose Freehold Market Valuation subject to existing tenancy agreements

Valuation Date 6 February 2018

Our Reference 8708493

Client Reference Heritage Property Fund

52-54 Albert Road South Melbourne, Victoria 3205 Our Reference: 8708493



1.0 Executive Summary 1.1 Instructions

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

Client / Authorised Party Primary Securities Ltd

Client Reference Heritage Property Fund

Valuation Purpose Freehold Market Valuation subject to existing tenancy agreements

1.2 Property Details

Property Address 52-54 Albert Road, South Melbourne, Victoria 3205

Property Description The subject property comprises a circa 1990 four storey mixed use retail and office building with seventeen (17) basement car parks and one (1) on-grade car park at the rear. The building currently provides a fully leased net rent of $583,494 per annum (plus GST) with secure leases to Seven Entertainment Services Pty Ltd and Thrive Network Pty Ltd.

The property is currently undergoing works by both tenants with the current vendor to contribute capital works and landlord contributions as part of the development. We have not been privy to the amount but assume all works will be completed, and have valued the property on the basis of an As If Complete. The works are expected to take approximately 6 weeks to complete.

Title Reference Tenure Registered Proprietor Title Area

Lot 1 Plan of Subdivision 340526M Volume 10251 Folio 597

Freehold Sandhurst Trustees Ltd Strata















































Total Site Area 612 sqm (Parent Title)

We have not searched Titles for every car park and assumed per sample search of Vol/Fol that the Titles are registered to ‘Sandhurst Trustees Ltd’ and will transfer to the applicant upon settlement.

Encumbrances Refer section 6.2 for details on encumbrances.

Lettable Area 1,731 square metres

Zoning Commercial 1




1.3 Risk Overview

Risk

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

Response: No

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

Response: No

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

Response: No

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

Response: No

1.4 Property Profile & Risk

Market Low Low – Medium Medium Medium – High High

Marketability Reasonable

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

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

Market Volatility The market for similar properties in this location in the past has generally demonstrated moderate market volatility. A note of caution is made noting the property is valued following a prolonged cyclical upswing driven primarily by yield compression as opposed to rental growth.

Stock Levels Currently stable stock levels.

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

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

Current Contract Price $8,650,000. The Contract of Sale provided is currently unsigned and dated by the Vendor. The purchase signed and dated the Contract of Sale on 13 December 2017.

Asset Low Low – Medium Medium Medium – High High

Highest & Best Use The highest and best use for the property is considered to be the existing use with longer term redevelopment potential.

Functionality The property is functional for the existing use.

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




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

Occupancy Status Leased to various tenants with a WALE of 5.44 years.

Leasing Demand Leasing demand for the property is currently reasonable.

Letting Period Estimated 3-4 months average for each tenancy.

Foreseeable Factors Likely to Impact on Value 3-5 yrs

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

- Pending lease expiries; - Foreseeable declining market conditions; - Foreseeable increased supply of similar style property; - Expected market softening

Other Factors United Investment Management Pty Ltd lease will commence at settlement.

Asset Management Low Low – Medium Medium Medium – High High

Asset Complexity The property is a standard asset class.

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

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

1.5 SWOT Analysis

Strengths High profile/exposure to Albert Road

Provision of eighteen (18) on-site car parking

Proximity to major arterial roads

High quality fittings and fixtures on completion

Weaknesses Capital expenditure required

Non-recoverable land tax

Opportunities Further development (subject to Council approvals)

Refurbishment/upgrading of premises

Claim depreciation to enhance after-tax performance

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

Development of competing premises

Downturn in the property market and/or economic climate

Economic factors including interest rates




1.6 Compliance Statements

Conditions Precedent to Issue of Mortgage Funds

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

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

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

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

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

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

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

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

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

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

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

ii. Action any request from Opteon to amend or alter the proposed manner in which the Report (in whole or part), and/or Opteon’s role or position, is, or is intended to be, outlined in the Offering




(which for the avoidance of doubt, may comprise the deletion of wording or the inclusion of additional or alternative information or wording); and

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

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

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

Assumptions & Recommendations:

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

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

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

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

An inspection by the Valuer following practical completion of the construction;

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

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

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

The developer completes the project and handover to the tenant within an appropriate time with effect that no sunset or termination clauses apply.

Assumptions Requiring Further Consultancy

None

Recommended Documents to Sight

Contract of Sale (Signed and Dated)

Certificate of Completion/Occupancy Permit

1.8 Key Valuation Outputs

Passing Net Income $533,608 per annum

Market Net Income $533,608 per annum

Initial Yield 6.17%

Market Yield 6.17%

Market Value Rate $4,997/sqm lettable area




1.9 Valuation Details

Market Value As If Complete

Market Value subject to Existing Leases and finishing of refurbishment works by Landlord and Lessee:

$8,650,000

(Eight Million, Six Hundred and Fifty Thousand Dollars)

Including a Notional Land Value: $5,200,000

(Five Million, Two Hundred Thousand Dollars)

Interest Valued Fee simple subject to existing lease

Date of Inspection 6 February 2018

Date of Valuation 6 February 2018

Date Issued 29 March 2018

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

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

Signatories

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

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

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

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

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

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

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




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

Instructing Party Mr David Butterfield – Chairman Primary Securities Ltd

Property Address 52-54 Albert Road, South Melbourne, 3205

Instructions Written Instructions

Client / Authorised Party Primary Securities Ltd

Valuation Purpose Freehold Market Valuation subject to existing leases

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

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

Contract of Sale

Lease Documentation

Title Search and Plan of Subdivision

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

Collation of information from relevant parties regarding the subject property;

Undertaking our own research regarding the subject property;

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

Undertaking market research of similar properties;

Preparation of valuation calculations; and

Preparation of this report.

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

A copy of our instructions is attached to this report.

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

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

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




4.0 Date of Valuation Valuation Date 6 February 2018



5.0 Location Location The inner suburb of South Melbourne is well regarded and situated approximately 3

radial kilometers south of Melbourne’s Central Business District. South Melbourne provides a variety of local retail facilities. South Melbourne is well serviced by recreational and educational facilities including Albert Park and Melbourne Sports and Aquatic Centre as well as public transport services including trams and bus services. South Melbourne is governed by the City of Melbourne and the City of Port Phillip. South Melbourne has a mixture of land uses, combining industrial, commercial, retail and residential areas. The population is generally young and well educated, with a high proportion employed as professionals especially in the finance, property & business services sector. The suburb also features the Clarendon Street commercial district, the South Melbourne Market and the Emerald Hill Court.

Neighbourhood The property is located on the northern side of Albert Road between St Kilda Road and Kings Way in Melbourne’s city fringe suburb of South Melbourne. The property is located within close proximity to Albert Park, Shrine of Remembrance and Melbourne Grammar School. Albert Road provides a quality mixture of ground floor retail, residential apartments and low to medium rise office buildings. The subject property is conventionally located 2 km south of the Melbourne CBD and is well serviced with public transport to and from. Notably Domain tram interchange is 150 metres to the north.

Access The subject is located on the western side of the road, with a narrow frontage, and has good access to a sealed road with constructed kerbs, gutters and foot paths. Rear laneway access is provided.

Parking Metered on street car parking is available on Albert Road, whilst there are also various public car parks available in the surrounding area.

Transport & Infrastructure The property has good access to major arterial roads including St Kilda Road, Kings Way and West Gate Freeway. Public transport tram and bus services are available within the immediate vicinity of the subject property. Domain Interchange is located 150 metres north of the subject.




Location Map

Sourced from Google Maps - www.google.com

Specific Location Map

Sourced from Google Maps - www.google.com




6.0 Tenure 6.1 Title Particulars:


















































Total Site Area 612 sqm (Parent Title)

We have not searched Titles for every car park and assumed per sample search of Vol/Fol that the Titles are registered to ‘Sandhurst Trustees Ltd’ and will transfer to the applicant upon settlement.

Unit Entitlement Lot 1 Plan of Subdivision 340526M Volume 10251 Folio 597 has a unit entitlement of 345 out of 1728 in the Registered Plan, which is a 20 % share in the common property.

Lot 2 Plan of Subdivision 340526M Volume 10251 Folio 598 has a unit entitlement of 413 out of 1728 in the Registered Plan, which is a 24 % share in the common property.



Lot 5 Plan of Subdivision 340526M Volume 10251 Folio 601 has a unit entitlement of 5 out of 1728 in the Registered Plan, which is a 0.003% share in the common property.





















6.2 Easements, Encumbrances & Other Interests Noted on Title

Encumbrances The Title refers to any encumbrances created by Section 98 of the Transfer of Land Act 1958 or Section 24 of the Subdivision Act 1988 and any other encumbrances shown or entered on the plan. A review of the plan did not reveal any such encumbrances.

Mortgage AL633564D registered 20 January 2015 in favour of Commonwealth Bank of Australia;

The land in this folio is affected by Owners Corporation Plan No. PS340526M




7.0 Planning Local Government Area Port Phillip City Council

Planning Scheme Port Phillip Planning Scheme

Current Zoning Commercial 1

Overlays Design and Development Overlay - Schedule 26-4A

Existing Use Retail & Office

Permitted Uses The existing use as a Retail and Office premises is a “Section 1 – Permit Not Required Use” under the “Commercial 1” planning ordinances.

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

Zoning Comment Sub-Precinct 4: Albert Road North & Bowen Crescent:

The Albert Road North & Bowen Crescent Sub-Precinct is a distinct part of the Precinct expressing a unique nineteenth century formal street layout. Higher scale buildings clustered around the Domain will sit in a landscaped setting serving as focal point within the overall precinct area and a point of transition along the St Kilda Road axis.

To ensure that built form creates a focal point for the wider St Kilda Road Precinct where Albert Road, St Kilda Road and Domain Road meet through the development of higher scale and quality buildings

To ensure that development reinforces the distinctive street pattern by building frontages following the curve of the street and are complemented by formal tree planting in setback areas.

To ensure that podium heights create and reinforce human scale and provide visual interest and activity for the pedestrian at street level.

To improve public streets, provide for additional street trees and increase pedestrian connections.

To ensure that development improves the pedestrian environment along Queens Lane and Bowen Lane through buildings designed to address and engage with the street edge, while maintaining the service role of these lanes.

To ensure that buildings are scaled to maintain a respectful setting and backdrop for the Shrine of Remembrance

Design and Development Overlay – Schedule 26-4A

Sub-Precinct 4-a Development:

Within 13 metres (inclusive of the 3 metre landscape setback) of any direct street frontage or abuttal to Albert Road and Kings Way must be a minimum height of 18m and must not exceed a maximum height of 30 metres, and

Between 13 metres (inclusive of the 3 metre landscape setback) of Kings Way and the northern boundary of 70 Albert Road must not exceed a height of 60 metres. A permit may not be granted to construct a building or construct or carry out works exceeding a height 85 metres AHD unless allowed by clause 4.0 of this schedule.

Development with a direct frontage to Park Street must:

Be built to the boundary, and

Within 5 metres of Park Street not exceed a height of 18 metres.

Development beyond the setback areas set out above must not exceed a height of 85 metres AHD. A permit may not be granted to construct a building or construct or carry out works which are not in accordance with this requirement unless allowed by clause 4.0 of this schedule.




8.0 Site 8.1 Site Details

Site Description The site comprises a generally rectangular shaped internal allotment that is generally level throughout.

Street Frontage 10.22 metres to Albert Road

Depth 61.30 metres / 61.67 metres

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

Site Area 612 sqm

Identification The property has been identified by reference to Title Search Statement and Plan of Subdivision.

8.2 Services

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

9.0 Proposed Improvements 9.1 Main Building

Main Building Type Four Storey, Commercial building

Accommodation The subject property comprises a circa 1990 four storey mixed use retail and office building with seventeen (17) basement car parks and one (1) on-grade car park at the rear. The ground and first floor is currently being utilised as a night club venue. Access is via manual swing doors to the east of the property. This area is currently undergoing major refurbishment with change of use to a restaurant and bar area. Level two and three has currently being leased by Thrive Network and is set to be used as a co-working hub. Refurbishment of these two floors is currently underway. Access is via ground manual sliding doors which open to the building lift lobby which services the three upper levels. Each four floors include staff amenities including kitchen facilities and male and female bathrooms. Ground Floor & First Floor - 840 sqm Seven Entertainment Services Pty Ltd Second & Third Floor - 891 sqm Thrive Network Pty Ltd Property benefits from eighteen (18) car parks on title (17 in basement & 1 on-grade).




Construction:

Floors Concrete slab (suspended)

Main External Walls Glass facade

Windows Aluminium

Roof Assumed metal deck

Main Interior Linings Plasterboard

Ceilings Older style suspended ceiling tiles on metal grid frame

Construction Year Circa 1990

Building Services

Lighting Fluorescent lighting to office component

Air-conditioning / Ventilation

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

Lifts The building has a single lift which traverses all floors. The lift has a 1 lift car with a capacity of 1,088 kg or 16 persons.

Electrical The building has standard electrical services.

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

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

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

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

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




9.3 Building Areas

Total Lettable Area 1,731 square metres

Building Area Measurement Basis

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

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

Accommodation: Measurement Basis: Lettable Area:

Ground Floor Gross Lettable Area (Retail) 360 sqm

First Floor Gross Lettable Area (Retail) 480 sqm

Second Floor Net Lettable Area 445 sqm

Third Floor Net Lettable Area 446 sqm

Total Lettable Area: 1,731 sqm

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

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

9.4 Condition and Repairs

Internal Condition Under renovation. Assumed “as if complete”.

External Condition Generally appears in good condition

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

Essential Health & Safety Annual maintenance certificate not sighted

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




10.0 Photography

Front

Ground Floor

First Floor

First Floor

First Floor




First Floor

First Floor

Back of house

Office Space

Office Space

Office Space




Office Space

Office Space

Rear

Rear

11.0 Environmental Issues 11.1 Environmental Hazards

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

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

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




11.2 Contamination Questionnaire

Question Response

Historical Use

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

No

Planning Controls

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

No

Adjoining Planning Controls

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

No

Neighbouring Land Use

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

No

Current Operations at the Property

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

No

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

No

Registers, Notices and Orders

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

No

Environmental Licensing

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

No

Asbestos

9a Could any buildings or improvements at the property predate 1990? Yes

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

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

Unknown

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

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




11.3 Contamination Commentary

Current Use Retail & Office

Past Use Unknown

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

API List of Potentially Contaminating Activities

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

Contaminated Sites Register

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

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

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

11.4 Asbestos

Asbestos Register We have requested but were not able to sight an asbestos register. Given the use of building materials with asbestos content is possible we recommend an asbestos register and management plan be prepared and retained on site to avoid potential asbestos related health risks to occupants and contractors.

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




12.0 Occupancy and Lease Details Occupancy Status Leased to various tenants with a WALE of 5.44 years.

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

12.1 Lease Summary

Lessee Seven Ent. Services Pty Ltd

Demised Premises Ground Floor and Level one, 52 Albert Road, South Melbourne

Commencement Date 30/05/2012

Initial Term 12 yrs & 4 months

Options 10 yrs

Expiry Date 30/09/2024

Commencing Rent $188,519 pa

Current Rent $233,494 pa

Rent Reviews The rent is reviewed annually in accordance with movements in the CPI. The rent is reviewed to market at the commencement of the option.

Net or Gross Net

Outgoings Tenant pays it proportion of outgoings

Permitted Use Licensed Nightclub under General Licence or such other Liquor Licence held in respect of Premises, Office and where appropriate car parking.

Incentives Mezzanine floor is rent free until 1st October 2014




12.2 Lease Summary

Lessee The Thrive Network Pty Ltd

Demised Premises Floors 2 & 3, 52 Albert Road, South Melbourne

Commencement Date 13 December 2017

Initial Term 5 yrs & 6 months

Options 5+5 yrs




Rent Reviews The rent is increased annually by 4%. The rent is reviewed to market at the commencement of the option(s).

Net or Gross Net

Outgoings Tenant pays it proportion of outgoings

Permitted Use Internal office use. The Tenant must not use the Premises for the sale or hire of goods by retail

Incentives 6 months’ rent free period

Special Conditions The Retail Leases Act does not apply

22.8 Landlord’s Works –

In this clause 22.8 Landlord's Works means all necessary fit out and alterations to the Premises to facilitate the Tenant's use of the Premises that is carried out or required to be carried out (as the context requires) by the Landlord as follows:

(a) prior to the Commencement Date of the Lease:

(i) removal and identification of any hazardous materials from the Premises;

(ii) replacement of broken window on level 2 façade of the Premises;

(iii) upgrade of distribution boards on level 2 of the Premises to comply with current safety standards as per Australian Standard AS3000;

(iv) upgrade of lift, including new car door operator, 5x new landing door headers, tracks and door hangers, access devices on all five (5) floors, new door closers and a new light ray/curtain of light;

(v) rectification of skylight on level 3 of the Premises; and

(vi) general external window clean of the Premises. .

(b) refurbishment of the ground floor foyer in consultation with the Tenant within six (6) months of the Commencement Date of the Lease;




12.3 Lease Summary

Lessee United Investment Management Pty Ltd

Demised Premises Eleven (11) Dedicated Parking Spaces market blue on the attached Plan

Commencement Date At Settlement (104/2018) of current Contract of Sale

Initial Term 12 months

Options 5+5 yrs




Special Conditions In addition to any other money payable by the Licensee to the Licensor under this Licence, the Licensee must pay to the Licensor within seven (7) days of demand all other levies, charges, duties or taxes of any kind (except income tax and capital gains tax) levied by any Government Agency on the Licensor concerning the Parking Spaces, including but not limited to any levy imposed under the Congestion Levy Act 2005 (Vic).




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

documents. We have applied a non-recoverable rate of $17,404 per annum for valuation purposes.

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

Outgoings Analysis

Outgoings We have been provided with a 2017-2018 Outgoings Budget. The outgoings (excluding non-recoverable owner outgoings) equate to approximately $77.30 psm ($133,798 per annum), which appear within an appropriate range in comparison to other commercial buildings.

Non-Recoverable Outgoings

For the purpose of this valuation, we have adopted the proposed non-recoverable owner outgoings of approximately $17,404 pa.

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

14.0 Sales History Current Contract for Sale The property has been recently contracted for $8,650,000. We have sighted a copy of

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

Contract of Sale Special Conditions

Subject to Capital Raising

Sale in Line with Local Market

Yes

Outgoings Schedule

$ psm:

Statutory Outgoings: Land Tax $17,404 $10.05

Council Rates $23,175 $13.39

Water & Sewerage Rates $15,257 $8.81

Estimate/Other $24,507 $14.16

$80,344 $46.41

Operating Expenses: Air Conditioning $0 $0.00

Cleaning (Common Area) $14,121 $8.16

Electricity (Common Area & Services) $0 $0.00

Fire Protection $0 $0.00

General Repairs $40,749 $23.54

Insurance $21,290 $12.30

Lift Maintenance $0 $0.00

Management Fees @ 0.0% $11,200 $6.47

Miscellaneous $0 $0.00

Structural R&M $0 $0.00

Security $2,786 $1.61

Estimate/Other $13,204 $7.63

$103,349 $59.70

Total Outgoings: $183,692 $106.12

Apportioned: Recovered Outgoings $133,798 $77.30

Non-Recovered Outgoings $49,894 $28.82




15.0 Market Evidence 15.1 Rental Evidence – Retail

Address Date Term & Options Total Rent Lettable Area Overall Rate

329-331 Clarendon Street, South Melbourne, VIC

Apr 2016 Term: 5 yrs Options: 5 yrs

$80,000 pa Net

200 sqm $400

Comments: Ground floor retail premises located towards the fringe of the Clarendon Street strip. Current liquor licence and restaurant permit in place. Analysed effective rent $380/sqm.

Blue Room Restaurant, 279-281 Clarendon Street, South Melbourne, VIC

Sep 2017 Term: 4 yrs Options: 4+4 yrs

$144,103 pa Net

426 sqm $338

Comments: Leased to Blue Room Restaurant comprising a modern restaurant and providing bar, food and function trade. Lease commenced on 14 September 2014 for 4 years subject to annual CPI rental increases and market reviews at the commencement of option terms. There are two further option terms of 4 years each. Rental rate over whole building comprising 246 sqm first floor residences. Face Rental Analysis: Retail 180 sqm @ $595.57/sqm = $107,203 p.a. Residence 246 sqm @ $150.00/sqm = $36,900 p.a.

50 Albert Road, South Melbourne, VIC

Feb 2017 Term: 10 yrs Options: 10+10+10 yrs

$160,000 pa Net

189 sqm $847

Comments: Comprises a two storey Victorian terrace which is currently being utilised as a cafe. Situated within the development known as “Fifty Albert" and is opposite Albert Park. Benefits from two (2) car spaces.

259 Park Street, South Melbourne, VIC

Feb 2016 Term: 3 yrs Options: 3 yrs

$63,000 pa Net

200 sqm $315

Comments: The property comprises a single storey retail premises built circa 1960s on a Commercial 1 zoned allotment of approximately 254 sqm. The building has a floor area of approximately 200 sqm, and comprises an open plan retail space, storage room and staff amenities. The property is situated in a secondary retail location to the south west of the Clarendon Street retail precinct. Surrounding developments include various retail and residential properties. The property also benefits from three on site car parks at the front of the property. Net effective rental can be analysed at $298/ sqm when taking into account the one month rent free offered at commencement as an incentive.

GF/52 Park Street, South Melbourne, VIC

Feb 2017 Term: 7 yrs Options: 7+7 yrs

$42,000 pa Net

89 sqm $472

Comments: Comprises a strata ground floor retail shell which has been recently renovated and is utilised as a restaurant. Accommodation comprises sales counter/bar, food prep area, standard stainless steel kitchen, small office and amenities. Benefits from surround sound system, single car space which is accessible from the rear and storage cage. 4% annual increases with market review at commencement of further terms. Tenant to bear 100% of building outgoings bar Land Tax as per Retail Leases Act (2003)

Market Rent Conclusions:

Our analysis of recent lettings from within the surrounding area indicates a net effective rental range of between $298 and $847 per square metre of lettable area for comparable retail tenancies, inclusive of car accommodation. Variations within this range are largely due to the location, size, use, age, fitout and exposure of the premises. Due to the market evidence above, we consider the current passing rents are reflective of the current market.




15.2 Rental Evidence – Office

Address Date Term & Options Total Rent Lettable Area Overall Rate

32/456 St Kilda Road, Melbourne, VIC

Mar 2017 Term: 2 yrs Options: 2 yrs

$21,000 pa Gross

58 sqm $362

Comments: Comprises strata titled office suite of approximately 58 sqm, located on the third floor of a three storey older style commercial building. Fit out includes 3 partitioned offices, reception and kitchenette. Property benefits from 1 undercover car park. Face rent can be analysed to net effective rental of $13,125pa ($226/sqm) for the office suite after deduction of outgoings ($4,800pa) and 1 month rent free, when the car space is allocated $200/cspcm

22/456 St Kilda Road Melbourne, Melbourne, VIC

Feb 2017 Term: 3 yrs Options: 3+3 yrs

$24,700 pa Net

71 sqm $348

Comments: Comprises strata titled office suite of approximately 71 sqm, located on the second floor of a three storey older style commercial building. Fit out includes partitioned offices, reception area, kitchenette and cat 5 data cabling. Property benefits from 2 secure car spaces. Face rent can be analysed to net effective rental of $19,214* ($271/sqm) for the office suite after deduction of 1 month rent free, when the car spaces are allocated $200/cspcm each *Agent advised a rental range. Midpoint adopted.

Level 5/437 St Kilda Road, Melbourne, VIC

Dec 2016 Term: 5 yrs Options: 3 yrs

$145,860 pa Net

429 sqm $340

Comments: 437 St Kilda Road is a 7-level office building constructed 1964. Refurbished 1986, 1992 and 1994. A major internal and external refurbishment was completed in late 2003. B Grade office building with 3.5 stars NABERS Energy Rating. 5 months’ rent free incentive. Including 6 car spaces. 6 car spaces @ $100 pcm, analysed rental rate $323/sqm. Outgoings approximately $134psm overall.

370 St Kilda Road, Melbourne, VIC

May 2017 Term: 2 yrs Options: 2+2 yrs

$65,000 pa Gross

142 sqm $458

Comments: Subdivided office premises located within a medium rise commercial building. 2 car spaces on title. Gross rental of $65,000 pa, estimated outgoings of $150 psm, analysed net rental of $43,700 pa, or $308 psm.

162/390 St Kilda Road, Melbourne, VIC

Jan 2017 Term: 5 yrs Options: 3 yrs

$73,000 pa Net

221 sqm $330

Comments: Located on the 16 level of a 23 storey commercial building located on the western side of St Kilda Road. Located within close proximity to the Domain Interchange and proposed Domain commuter railway station. The building was constructed in 1976. Include 1 car space, analysed at $100 pcm, rental rate excluding car at $325 psm.

387 City Road, South Melbourne, VIC

Nov 2017 Term: 5 yrs Options: Nil

$180,000 pa Net

601 sqm $300

Comments: Ground floor office space in a corner location with 8 on-site car spaces.




Market Rent Conclusions:

Our analysis of recent lettings from within the surrounding area indicates a net effective rental range of between $226 and $325 per square metre of lettable area for comparable office tenancies, inclusive of car accommodation. Variations within this range are largely due to the location, size, use, age, fitout and exposure of the premises. Due to the market evidence above, we consider the current passing rents are reflective of the current market.

We have apportioned and analysed car accommodation evidence from the above office evidence, which indicates a range of between $200 per calendar month to $250 per calendar month. Additionally, from our discussions with the local leasing agent, we have been advised that the subject property could lease secure car parking spaces in the vicinity of $225 per calendar month.

The passing and market rental is illustrated as follows:

Level/Tenancy

Passing

Rent

Recovered

Outgoings

Passing

Income

Passing

Rate

Market

Rate

Net Or

Gross

Market

Rent

Ground Floor & 1st Floor 840 sqm $213,807 $64,932 $278,739 @ $332 @ $332 Gross $278,739

Floors 2 & 3 891 sqm $320,000 $68,874 $388,874 @ $436 @ $436 Gross $388,874

Eleven (11) dedicated parking spaces 11 car/s $30,000 $0 $30,000 @ $227 @ $227 Gross $30,000

Ground Floor & 1st Floor 7 car/s $19,687 $0 $19,687 @ $234 @ $234 Gross $19,687

Totals: $583,494 $133,806 $717,300 $414 $414 $717,300

Passing and Market Income Analysis




15.3 Sales Evidence

Property 21 Yarra Street, South Melbourne, VIC

Sale Price $4,200,000

Sale Date 22-Jun-17

Site Area 110 sqm

Zoning Commercial 2

Lettable Area 495 sqm

Property Description Modern four storey office building with view to the CBD. Secured 8 on-site car spaces. Leased to "Caramel Creative" for 5+5+5 year from August 2016, returning $168,000 pa net.

Analysis WALE 4.1 years Initial Net Yield 4.00 % Market Net Yield 4.00 % Reversionary Yield 4.00 % Site Rate $38,182/sqm Lettable Area Rate $8,485/sqm

Comparability Comprises a smaller commercial building on a smaller sized allotment. Comparable quality of improvements. Less preferred Commercial 2 location. On balance we expect a higher market yield for the subject property.

Property 9 Palmerston Crescent, South Melbourne, VIC


Sale Date 20-Mar-17

Site Area 485 sqm

Zoning Commercial 1

Lettable Area 711 sqm

Property Description The subject property comprises two storey office building situated in the Domain Road precinct. Property benefits from on-site car parking and side/rear laneway access. Located 500m from new Domain Train station. Subject was sold with vacant possession.

Analysis Market Net Yield 4.71 % Reversionary Yield 4.85 % Site Rate $11,340/sqm Lettable Area Rate $7,736/sqm

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




Property 1 Bowen Crescent, Melbourne, VIC


Sale Date 05-Oct-17

Site Area 642 sqm

Zoning Commercial 1

Lettable Area 3,700 sqm

Property Description The subject property comprises a 7 storey commercial building with basement car parking for 30 vehicles. Accommodation includes open plan office space with natural light. The subject was sold on short term WALE returning $669,285 net income per annum.


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

Property 17 Market Street, South Melbourne, VIC


Sale Date 28-Apr-17

Site Area 1,141 sqm

Zoning Commercial 2


Property Description The subject property comprises corner allotment three storey commercial office building. Property benefits from 41 onsite car spaces. Common areas within the building have been recently refurbished. Subject was sold leased on 3.82 year WALE.


Comparability Comprises a larger commercial building on a larger allotment. Comparable quality of improvements. Less preferred Commercial 2 location. On balance we expect a higher market yield for the subject property.




Property 11 Dorcas Street, South Melbourne, VIC


Sale Date 23-Sep-16

Site Area 1,019 sqm

Zoning Commercial 1


Property Description The subject property comprises five storey commercial building situated just behind St Kilda Road. Property is a corner allotment and benefits from onsite parking for 25 vehicles. Accommodation is a mix of open plan part refurbished or fully fitted areas some with conference rooms, offices, meeting room and large reception and break out areas. Subject was sold fully leased to 'Dimension Data' on short term WALE.


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

Property 102 Albert Road, South Melbourne, VIC


Sale Date 22-Dec-16

Site Area 1,823 sqm

Zoning Commercial 1


Property Description The subject property comprises six storey office building with 104 on-site car spaces. Property benefits from views of Melbourne CBD and Albert Park. Zoned Commercial 1. Subject was sold advertised for development potential with 60 metre height restriction.

Analysis Market Net Yield 5.50 % Reversionary Yield 5.87 % Site Rate $13,374/sqm Lettable Area Rate $5,114/sqm

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




Sales Evidence Conclusions:

Sales Analysis Summary

Address Sale Price Date Land Area

Lettable

Area $ psm Land

$ psm

Lettable

Market

Yield WALE

21 Yarra Street, South Melbourne $4,200,000 Jun-17 110 sqm 495 sqm $38,182 $8,485 4.00% 4.11 yrs

9 Palmerston Crescent, South Melbourne $5,500,000 Mar-17 485 sqm 711 sqm $11,340 $7,736 4.71%

1 Bowen Crescent, Melbourne $13,575,000 Oct-17 642 sqm 3,700 sqm $21,145 $3,669 5.36% 0.70 yrs

17 Market Street, South Melbourne $19,400,000 Apr-17 1,141 sqm 2,565 sqm $17,003 $7,563 5.46% 3.80 yrs

11 Dorcus Street, South Melbourne $23,280,000 Sep-16 1,019 sqm 3,885 sqm $22,846 $5,992 6.01% 1.30 yrs

102 Albert Road, South Melbourne $24,380,001 Dec-16 1,823 sqm 4,767 sqm $13,374 $5,114 5.50%

Subject Property (Valuation) $8,650,000 Feb-18 612 sqm 1,731 sqm $14,134 $4,997 6.17% 5.44 yrs




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

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

16.2 Income Approach

Capitalisation Method

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

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

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

We have had regard to yields within our comparable evidence which indicates a market yield range of between approximately 4.00% and 6.01%. We have adopted a capitalisation rate of 6.00% in our calculations herein.

Within our valuation calculations we have made an allowance for Land Tax ($17,404) which is a non-recoverable outgoing under the Retail Leases Act (2003), which we believe would apply to the subject property.




Market Income Capitalisation Method

Calculations

Our valuation calculations are summarised as follows:

Market Income Capitalisation Method

Market Annual Rent: $717,300

Market Income: $717,300

Less Outgoings: -($183,692)

Net Market Annual Income: $533,608

Capitalised @ 6.00%

Capitalised Value (before adjustments): $8,893,465

Capital Adjustments:

New Tenant Incentives -($129,625)

Sub-Total: -($129,625)

Total Market Value: $8,763,840

Indicates, Total Market Value: $8,750,000

Sensitivity Analysis:

Net Market Annual Income: $533,608 $533,608 $533,608

Capitalised @ 5.50% @ 6.00% @ 6.50%

Capitalised Value: $9,701,961 $8,893,465 $8,209,352

Capital Adjustments: -($129,625) -($129,625) -($129,625)

Total Market Value: $9,572,337 $8,763,840 $8,079,727

Indicates Total Market Value: Rounding $25,000 $9,575,000 $8,775,000 $8,075,000

Reflecting: Initial Yield 5.57% 6.08% 6.61%

Reversionary Yield 5.57% 6.08% 6.61%

$ psm Lettable Area $5,531 $5,069 $4,665

$ psm Land $15,645 $14,338 $13,194




16.3 Market Approach

Direct Comparison Method

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

Our analysis of the available sales evidence detailed within this report indicates a value range of between $3,669 and $8,485 per sqm of lettable area. The evidence supporting a value towards the upper end of the range is generally reflective of the more modern construction, strong location/position and smaller sized premises. The evidence supporting a value towards the lower end of the range is reflective of the inferior accommodation, and larger size of the premises and exposure of the property. With consideration for the above, we have adopted a lettable area rate range from $4,750 to $5,250 psm, i.e. $5,000 per square metre of Lettable Area.

16.4 Valuation Reconciliation & Conclusion

Valuation Reconciliation

Having regard to the above calculations, current Contract of Sale and after taking into account both the positive and negative attributes of the property, from an objective and unbiased, yet balanced point of view, we are of the opinion that the Market Value of the property is $8,650,000 (Eight Million, Six Hundred and Fifty Thousand Dollars) GST exclusive – As If Complete in the Current Market.

Direct Comparison Lettable Area Basis (and Sensitivity Analysis)

Market Value

Lettable Area: 1,731 sqm @ $4,750 $8,222,250

1,731 sqm @ $5,000 $8,655,000

1,731 sqm @ $5,250 $9,087,750

Indicates Total Market Value: Rounding $50,000 $8,650,000

Valuation Reconciliation

Market Approach (Direct Comparison Lettable Area Basis (and Sensitivity Analysis)) $8,650,000

Income Approach (Market Yield) $8,750,000

Contract of Sale $8,650,000

Adopted Valuation: $8,650,000

Including a Notional Land Value: $5,200,000

Adopted Valuation reflects:

Rate psm Land Area: $14,134

Rate psm Lettable Area: $4,997

Initial Yield: 6.17%

Market Yield: 6.17%

Reversionary Yield: 6.17%




17.0 Estimated Insurance Value Insurance Estimate We have determined the replacement value for insurance purposes at $7,350,000

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

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




18.0 Valuation 18.1 Market Value As If Complete - Subject to Existing Leases

We are of the opinion that the Market Value of the freehold interest of the property subject to existing lease and tenancy agreements, as at 5 February 2018 subject to the comments in this report, and finishing of refurbishment works by Landlord and Lessee is:

$8,650,000

(Eight Million, Six Hundred and Fifty Thousand Dollars) Including a Notional Land Value of $5,200,000 (Five Million, Two Hundred Thousand Dollars)

Interest Valued Fee simple subject to existing leases


Date of Valuation 5 February 2018

Date Issued 29 March 2018


Signatories

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

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

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

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




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

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

As If Complete & Proposed Developments - Approvals

If this Valuation assesses the As If Complete Market Value of any proposed development this valuation should not be relied upon by any person or entity until all relevant regulatory and development approvals are in place.

As If Complete Assessment Our As If Complete Market Value Assessment is subject to the following specific assumptions:

Satisfactory completion of the improvements in accordance with the plans, specifications, cost estimates and details provided.

An inspection by this Company following practical completion of the construction.

Confirmation or variation of the original valuation figure relevant to the original valuation date following an inspection of the project and any leases after practical completion.

Issue of all relevant approvals including a satisfactory building completion certificate under the appropriate legislation.

Sighting of any reports from other experts who have provided advice in aspects of the construction of the building(s).

The right to review and if necessary vary the valuation if there are changes in the project itself or leasing.

An unencumbered (subject to any “standard” encumbrances registered on the Title pursuant to the Strata Titles Act), individual Certificate of Title is issued and available for the completed unit(s).

The bona fides of the Building Contract price. It is recommended that any financier agreeing to fund the construction of a development project seek independent Quantity Surveyors advice in relation to the agreed building contract to ensure it comprehensively covers the scope of works proposed and the agreed price is at market construction rates.

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

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

Development Cost Assumption

For the purposes of this valuation we have relied upon the development cost estimates provided. Any variation in the final development costs may have an impact on the residual value of the project (project related site value), or could have an impact on the viability and funding of the project. It is also assumed that the development cost estimates adequately cover the necessary scope of works to realise the project’s development in accordance with the plans, specifications, and conditions of Development / Subdivision Approval. In the event there is any variation to the above costs we reserve the right to review this valuation.

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

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

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




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

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

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

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

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

Inconsistencies in Assumptions

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

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

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

Market Evidence Information Availability

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

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

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

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

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

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




Owner Occupied Property Owner-occupied properties valued for lending purposes will normally be valued on the assumption that the property is transferred unencumbered by the owner’s occupancy, i.e., that the buyer is entitled to full legal control and possession. Our valuation is prepared on the basis of vacant possession and in the event the property is unable to be transferred unencumbered we reserve the right to review our valuation.

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

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

Short Form Valuation Report This valuation report has been prepared for mortgage security purposes and is presented in a short form as per standing instructions where applicable. A more comprehensive valuation report can be provided if required.

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

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

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

Title and Unregistered Instruments

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

Appendices

1 VMS Instructions 2 Title Search Statement and Plan of Subdivision 3 Planning Property Report 4 Contract of Sale