Settlement of 2-14 Elsie Street Burwood

Ashe Morgan Funds Management is pleased confirm the settlement of the purchase of 2-14 Elsie Street, Burwood by the 2-14 Elsie Street Unit Trust.

Having established the Trust and raised sufficient funds from Investors and debt finance, the Trustee successfully acquired a six level commercial building which will be the primary asset of the Trust. The total costs of this purchase were $38,890,000 and the transaction was completed through the raise of a total of $15,750,000 of equity capital and $23,140,000 of debt funding.

The final settlement figures departed marginally from those represented within the Information Memorandum and comprised allowances for on settlement property adjustments (including adjustments to rates and taxes) and the prepayment of the first interest payment to the National Australia Bank – the senior debt Lender. Other departures related to fees and charges that were not expected at the time of preparation of the IM however were considered consistent with the requirements for the settlement of the Property. These departures (both costs and savings) were considered fairly insignificant given the size and nature of this transaction.

The Trustee has appointed Ashe Morgan Funds Management as the Investment Manager and Rebel Property Group as the Property Manager in line with the expectations of the Information Memorandum. All investors have been made aware of the main points of the agreements with these Managers including payment of fees and expenses through pre-settlement documentation.

The Debt Facility represents 65% of the valuation of the Property and has been established in line with the commercial terms as described within the IM. The Trustee has sought to minimise the risk of changes in the Base Rate of the Facility Interest Rate by entering into a fixed interest rate arrangement for an amount of $20,000,000 of the total debt on a 3 year basis. We are pleased to confirm that on settlement, the Base Rate dropped to 4.95% some 0.15% lower than that anticipated within the IM. This reduction in the fixed rate improves the estimated running yield of the investment.

Overall, the investment is expected to perform consistently with expectations. The purpose continues to be to maintain the existing building and tenant amenity with the intention of extending the current lease tenure as well as investigate and make reasonable efforts to obtain a development approval for a residential development to add further value to the Property.

This investment is expected to follow the same path as Ashe Morgan’s recent successes with the sale of its Marsden Park Shopping Centre and Dee Why Marketplace assets. Investors in the Marsden Park Unit Trust received net returns of 23% IRR and a cash multiple of 1.65 times with the sale of the Dee Why Marketplace expected to provide investors a 27% net IRR and a cash multiple of 1.7 times.