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DOMUS US
MULTIFAMILY REAL
ESTATE FUND
Equity Capital Raise for Domus US
Multifamily Real Estate Trust No. 2
23 September 2019
Town Center – Queen Creek,Arizona
Avia 266 – Mesa,Arizona
UNIQUE OPPOURNITY TO INVEST INTO DIRECT
MULTIFAMILY REAL ESTATE IN THEUS
MULTIFAMILY SECTOR UNDERPINNED BY A RANGE
OF ATTRACTIVE FUNDINGOPTIONS
• Alternative investment opportunity to Australian real
estate or listed equities market with high barriers to entry
to invest
• Multifamily is the strongest performing US real estate
sector over the last 25 years
• Access to non-recourse, low fixed rate, interest only, long
term (10-35 yrs) debt at super low “bottom of the cycle”
rates
• Fully assumable upon resale making it an attractive
investment opportunity to a wide array of investors
STRONG RETURNPROFILE PRIME ASSETLOCATION
• Attractive high yielding returns in markets underpinned
by strong demographic and positive economic trends
• Provides stable, recurring and growing distributions
coupled with an opportunity for capital appreciation
supported by positive long-term fundamentals
• Assets are strategically located in one of the strongest
growing markets in the US
• Strong economic, employment and population growth,
coupled with strong apartment demand, in low taxing
States
DEMONSTRATED US TRACK RECORD VALUE-ADD OPPORTUNITY
• US and Australian investment & asset management team
provide extensive experience with large scale US
multifamily projects within the Phoenix market
• The manager has a proven ability of investing in large
scale institutional quality US multifamily residential assets
• The assets offer an excellent opportunity to increase rents
with a programmatic renovation program
• Strategic upgrades to common area amenities to enhance
appeal and bolster tenant experience
TRANSACTION RATIONALE
DOMUS 2
EXECUTIVE SUMMARY
Domus 2 provides Australian investors with a unique opportunity to invest into US direct multifamily real estate providing attractive risk-adjusted returns
DOMUS 2 PORTFOLIOPurchase Price: US$78,750,0001
Independent Valuation: US$79,500,00 (‘as is’ basis)
Acquisition Yield:5.5%2
Sector: US multifamily real estateassets
Market: Phoenix sub-markets; Queen Creek & Mesa,Arizona
No. of Assets:2
No. of Apartments: 442
Average Portfolio Occupancy: 96%
FUND HIGHLIGHTS
Equity Capital Raise: US$29,000,000
Fund Term: 5yrs3
Distributions: Quarterly
Debt Financing: 10 yr term | Initial up to LTV 70%4
Target Rate: 3.99% fixed with 5 yr interest only period4
Strategy: Value-Add
Exit: Individual or portfolio sale; IPO
TARGET RETURNS5
1. Plus acquisition costs
2. Look through to Yr. 1
3. Plus 2x1 Yr. subject to unitholder vote
4. Agency loans are non-recourse, with
no covenant s and are fully
assumable . Refer to page 7
5. Forecast returns to investors are post fees and pre tax . Forecast returns
are over the 5 Yr. Fund term plus 2 x1 Yr. extensions
Phoenix, Arizona
Mesa, Arizona
CASH-ON-CASH
Y1 6.0% | Y2 8.0%
LEVERED IRR (Gross)
18.0% +
EQUITY MULTIPLE (GROSS)
2.1X
CASH-ON-CASH (AVG)
8.5%
Page 2
Queen Creek, Arizona
DOMUS 2
A UNIQUE OPPORTUNITY
• The manager is seeking a total equity capital raise of US$29m to acquire 2 US multifamily real
estate assets located in Phoenix, Arizona
• The Domus Multifamily Real Estate Fund platform, established by experienced sponsors LS Global
Advisors and US based Geringer Capital, provides Australian investors a USD opportunity to
invest in high quality income-producing US multifamily assets
• The Phoenix sub-markets have some of the highest jobs and population growth trends in the US
and allows investors to access US income producing real estate in a strengthening US economy
• Multifamily real estate is any building that contains five or more separate dwellings consisting of
several hundred individual apartments held on a single title and leased to individual tenants
• The single title ownership feature of US multifamily properties confers significant management and
operational efficiency advantages where there are a large number of dwellings
• Purpose built apartment buildings designed specifically for the rental market
• Mature asset class providing one of the most common forms of housing in the US
• Should not be compared to social housing
• The US multifamily sector has a long history of providing stable returns including during the 2008 US
Housing and Financial Crisis
• Since the Crisis the asset class has enjoyed above average returns and has outperformed when
compared to other US real estate classes due to high occupancy levels
• Unique to multifamily real estate investment in the US is the access to long term, low cost, fixed
rate, interest only, non-recourse, no covenant debt financing
• Financing options available through US Government insured or guaranteed debt, CMBS and non-
bank lenders
9.8% 9.6% 9.6% 9.4%
8.4%
US PROPERTY AVERAGE TOTAL ANNUAL RETURN
OVER 25YEARS2
Building on a record-breaking 2018, US multifamily investment is
experiencing its most active start to a year, with $36.4 billion in
transactions in Q1 2019, up 1.3% year-over-year1^
•
•
•
Multifamily Hotel Industrial Retail Office
US MULTIFAMILY REAL ESTATE PERFORMANCE
Revenue stability as strong employment and population growth is
creating demand for rent with vacancy rates down to 4.6%2
Favourable regulatory environment through non-recourse US Federal
Government backed funding options and tax incentives
Strong investment volumes and transactions drive higher liquidity in the
market. The multifamily sector represented more than $1 trillion or 27%
of all commercial real estate sales based on the dollar value of all sales
over the past 16 years3
LS GlobalAdvisors are pleased to present this unique unlisted investment opportunity in the US multifamily real estate sector
OVERVIEW
WHY INVEST IN US MULTIFAMILY REAL ESTATE?
1. Source: CBRE Research, Q1 2019 US Multifamily Figures
2. Source: CBRE Research, Q3 2017. Based on trailing four-quarter total returns from Q3 1992 through Q3 2017
3. Source: CBRE Research, US Multifamily Housing: A Primer for Offshore Investors Q1 2019
^ Refer to page 16 for an overview of key drivers of multifamily
WHAT IS MULTIFAMILY?
Page 3
STRATEGIC OVERVIEW
ASSET STRATEGY
VALUE ADDLeverage existing experience with
professional management to implement
refurbishment strategy and upgrade units
and increase rental income
ENHANCE
Upgrade amenities and common areasto
enhance appeal and increase overall
tenant experience
DELIVER
Deliver returns for investors through
increased rental income and sell the
renovated stabilized assets at the
appropriate time
BOOST
Boost resident profile, drive increased
retention and stabilise occupancyrates
• 22280 209th South Way, Queen Creek,Az
• 176 units, Class A, built in 2009
• Purchase price: US$33,500,000
• Acreage: 10.53
• Price per unit:US$190,340
• Price square foot: US$203
WHAT HAS DOMUS 2 ACQUIRED?
Avia 266 – Mesa,Arizona Town Center – Queen Creek,Arizona
• 2354 W University Dr, Mesa, Az
• 266 units, Class B, built in 1984
• Purchase Price: US$45,250,000
• Acreage: 10.76
• Price per unit: US$170,112
• Price square foot: US$233
Avia 266
Phoenix
CBD
Town Center
The Domus 2 Portfolio comprises of two strategically located assets in Phoenix, Arizona comprising of a total of 442 units with an average portfolio
occupancy rate of 96%
Page 4
Phoenix-MesaGatewayAirport
MANAGEMENT OVERVIEW
LS GLOBAL ADVISORS & GERINGER CAPITAL
Les Koltai and Robert Geringer have over 60 years of combined international real estate investment and asset management experience
• Les is the Founder and CEO of LS Global
Advisors
• Over 30 years’ experience as a partner at
DLA Piper and as a leading lawyer in
Real Estate & Funds Management
domestically and internationally
• Advisor to major corporations, institutional
investors, PE firms, fund & investment
managers across APAC, US and Europe
ABOUT LS GLOBAL ADVISORS – INVESTMENT MANAGER
• LS Global Advisors is an Asia Pacific based internationally focused boutique real estate advisory business
specialising in identifying and structuring tailored investment opportunities internationally for its clients, investors
and partners
ABOUT DOMUS US MULTIFAMILY REAL ESTATE FUNDS
• Established jointly by LS Global Advisors and Geringer Capital, the Domus Multifamily Real Estate Funds
platform provides investment opportunities for Australian and other offshore investors in high quality income-
producing value add US multifamily assets
• Assets are situated in high employment and population growth markets across the US taking advantage of the
Fund’s ability to secure long term low fixed rate, long term (up to 35 yrs), non-recourse finance including under
the US Government guaranteed debt under the HUD Program and Agency debt options, providing investors with
stable long-term income and the potential for future capital growth
ABOUT GERINGER CAPITAL - US ASSET MANAGER• Geringer Capital is a leading Los Angeles based industrial and residential real estate owner, developer and
manager with a particular focus on the construction, development, financing and management of US multifamily
real estate
LS GLOBAL ADVISORS1
Les KoltaiManaging Director
GERINGER CAPITAL1
Robert Geringer
Chairman and CEO
• Rob is the Founder and CEO of Geringer
Capital and is a licensed attorney with
over 30 years experience in real estate
development, finance, construction,
taxation and syndications
• Demonstrated track-record in delivering &
managing large-scale multifamily assets
• Project experience in California, Arizona,
Tennessee, Utah, Arizona, Mississippi,
New Mexico, and Texas
Page 5
PROPERTY MANAGEMENT
• Apartment Management Consultants (“AMC”) will be appointed as Property Manager over the Domus 2 Portfolio.
AMC will be responsible for ensuring the accurate and timely collection of rental income from tenants, the
maintenance/repair of the properties where and when required and overall on site management of the properties
under Geringer Capital’s supervision
• AMC has a proven track record to optimise operations and formulate specific refurbishment programs across
multifamily assets having successfully implemented the refurbishment strategy across the Domus 1 portfolio
FUNDADMINISTRATOR• Eticore Pty Ltd (“Eticore”) will be appointed as an independent third party Fund Administrator for Domus 2. Eticore
will be responsible for all fund accounting and administration services including management of the Unit Register
• Eticore is currently engaged as Fund Administrator over the Domus 1 Fund
1. Further details on Page 25 and 26
KEY INVESTMENT HIGHLIGHTS
Investment structure Unregistered wholesale managed investment trust
Open / Closed Closed ended
InitialTerm1 5.0 years
Asset type 2 x US Multifamilyassets
Average Portfolio Occupancy 96.0%
Portfolio AcquisitionPrice US$78.75m
Issue price per unit $1.00
Initial gearing (Loan toCost) 65.0%
Assumed Acquisition Capitalisation rate2 5.5%
Distribution payments3 Quarterly
Target payout ratio 100%
Average Cash-on-Cash return 8.5%
Forecast Distribution Yield p.a. FY20 / FY213 6.0% / 8.0%
Forecast IRR (post all fees, pre tax)4 18.0% +
Investment / Asset Management Fee5 6.0% of Gross Revenue
Performance Fee6 20% of performance over an 8% IRR stepping up to 30% over a 15% IRR
STRATEGIC OVERVIEW
FUND STRATEGY
1. Plus 2x1yr, subject to unitholder vote
2. Look through to Yr. 1
3. Returns to investors are post fees and before tax
4. Based on a 7 year investment term
5. Fee to be equally split between Geringer Capital and LS Global Advisors. One third of the Management Fee in year 1 is deferred
6. Performance fee to be paid at the wind-down of the fund
Page 6
The portfolio provides an attractive forecast IRR of 18% + and a sound average distribution return of 8.5% over the Fund term1
STRATEGIC INVESTMENT• Invest in US multifamily assets with below free-
market rents and rental growth through
refurbishment
HIGH GROWTH POTENTIAL• Invest in target markets which have positive
demographics experiencing economic,
employment and population growth
UNDERSUPPLIED MARKETS
• Invest in target markets currently experiencing
undersupply
VALUE-ADD / REFURBISH• Through active asset management refurbish assets
driving above market annual rental increases,
valuation appreciation and investor returns
US FEDERAL GOVT TAX INCENTIVES• Tax incentives are provided to large corporatesand
multinationals to relocate headquarters to low-taxing
states such asArizona
EXIT STRATEGY• Potential exit strategies include IPO or individual
asset or portfolio trade sale
The multifamily sector is underpinned by a variety of unique and attractive funding options available from both the US Federal Government, CMBS and a
variety of bank and non-banklenders
COMMENTARY
• Funding options generally available include:
• US Federal Housing Authority’s Housing Urban
Development financing (HUD financing);
• US Government back Agency loans under Freddie Mac
and Fannie Mae;
• a variety of competitive bank and non-bank lending
options
• Financing options provide long term, non-recourse, no
covenant financing with low fixed interest rates currently
between 3.4%-4.2%
• Agency financing offers interest only periods of up to 7
years and non-bank lenders of up to 10 years
• Financing is secured at an asset level and is fully assumable
• Multiyear low 10 yr. US Treasury rates of ~ 2.0% has
driven down the cost of borrowing in the multifamily
sector, making it an attractive investment opportunity
• The Manager is an approved HUD and Agency borrower.
Typically this funding can be difficult to secure as the
investment manager must meet strict financial, criminal and
other background checks
Sources ($USm)
Debt Financing: $54,283
Equityraising:
Management co-investment: $1,443
Third-partyequity $27,416
Totalsources $83,142
Uses ($USm)
PurchasePrice $78,750
ClosingCosts $1,181
Capex $1,466
Transaction and othercosts $1,745
Totaluses $83,142
FINANCING OVERVIEW
ATTRACTIVE FUNDING OPTIONS AVAILABLE TO US MULTIFAMILY
Page 7
Debt Financing Terms
Debt ProviderFreddie Mac
Term 10years
Facility Amount US$54.28m
Initial Loan to Value (LTV) Up to 70.0%
Initial Loan to Cost (LTC) 65.0%
Non-Recourse Yes
Covenants Nil
Interest Rate 3.99%
Interest only period 5.0 years
Fully assumable Yes
TRACK RECORD
DOMUS US MULTIFAMILY REAL ESTATE FUND NO.1
1. Based on recently procured 3rd party formal appraised values received April 2019
2. Estimated with approval due end July 19
Fund Launch June 2017 Fund Type / Term Closed end 5 yrs. + 2x1 (subject to unitholder vote)
Status Closed to new investors Assets RefinanceOn target to repay 100% of investors equity Q4’19post-
refinance
No. of Assets 8 assets Purchase Price US$161m in 2017
Target IRR 25%+ Asset Value Current portfolio value of US$244.1m1
3. Subject to meeting ICR test 6. Average
Page 8
4. Estimated based on spread to current 10yr Treasury rate @ ~2.0%
5. Total inclusive of Arizona Assets
The Manager has a proven track record in delivering a successful refurbishment and investment strategy
DOMUS FUND NO.1 PORTFOLIO PERFORMANCE• In 2017, LS Global established Domus US Multifamily Real Estate Fund
No.1 (Domus 1) and successfully acquired a high quality geographically
diverse portfolio of 8 US multifamily assets for US$161.0m
• The total equity requirement of US$21.3m raised by LS Global Advisors
with majority of equity raised from Australian wholesale HNW investors
• Domus 1 is now closed to new investors
ARIZONA ASSET PERFORMANCE OTHER ASSET PERFORMANCE
AssetVenata Palms
Phoenix,Az
Waterstone
Mesa,AzPark Village
Mesa, Az
Stark Street
Portland, Or
Hidden Cove
Layton, UtAspenwood
Salt Lake City, Ut
Holladay
Salt Lake City, Ut
Cheyenne
Colorado Springs, ClTotal
Purchase Price US$14,250,000 US$28,150,000 US$9,375,000 US$22,825,000 US$20,950,000 US$19,800,000 US$9,300,000 US$36,350,000 US$161,000,000
Appraised Value US$18,600,000 US$44,100,000 US$17,500,000 US$33,000,000 US$31,500,000 US$32,300,000 US$14,400,000 US$53,000,000 US$244,400,000
% Uplift 31% 57% 87% 45% 50% 63% 55% 46% 52%6
Refi Loan Amount US$14,880,000 US$35,576,000 US$14,000,000 US$26,400,0003 US$25,200,0003 US$25,840,0003 US$11,520,000*3 US$42,400,0003 US$195,816,000
Fixed Rate 35yrs 3.94% 3.49% 3.1%2 3.4%4 3.4%4 3.4%4 3.4%4 3.4%4 3.4%4,6
LTV 80% 80% 80% 80% 80% 80% 80% 80% 80%6
HUD Refinance Completed Dec-18 Completed Jun-19 Completed Jul-19 Lodgement Aug/Sep-19 Approval exp 90 days Approval exp Aug-19 Lodgement Aug/Sep-19 Lodgement Aug/Sep-19 N/A
The Domus 1 portfolio has experienced a significant uplift in rental rates of ~14% and an average uplift in the portfolio valuation of ~52% since inception
KEY INVESTMENT HIGHLIGHTS FUND SNAPSHOT
• Successful execution of refurbishment strategy since inception:
providing increase in NOI; and
total valuation uplift of ~52% across the portfolio. A lower Q1 2019
occupancy rate reflects a higher number of apartments being taken offline
to execute the refurbishment strategy to achieve higher rental returns. 70%
of the units stated for renovation have been completed
• Q1 2019 weighted average rental rates are 13.8% higher than Q1 2018 driven by
increasing rental rates on new leases, particularly those that have been recently
upgraded/refurbished
• With the 10-year treasury rate at a multi-year low, refinancing of Domus 1’s next
few assets will be significantly lower (3.5-3.7% range) which will drive higher
returns for existing investors
AVERAGE RENT COMPARISON
FundLaunch June 2017
FundName Domus Multifamily Real Estate TrustNo.1
Purchase Price1 US$161.0m
AUM (Apr-19) US$244.4m
Equity Contribution US$21.6m
Debt (LTV)190.0% at 5.9% for 24 months (bridging finance)
82.5% at 3.4% fixed interest (HUD finance)
FundTerm 5 years (plus two x 1 year options to extend)
MinimumInvestment US$500,000
Manager Co-Investment Min 15% (on equity)
No. of Assets8 assets (total 1,296 units)
Avg. U$20.0m per asset
Portfolio Occupancy1 93.75%
Avg. Target Distributions2 8.0% paid quarterly
Forecast FundIRR3 +25.0%
Cap rate4 6.6%
1Q2018 1Q2019 Variance (%)
Occupancy (%) 90.9% 84.2% -7.4%%5
Avg. Rental Rate ($/month) $911 $1,037 +13.8%
US Treasury Rates 2.74% 2.41% -12.0%
1. Upon acquisition / Fund Launch
2. Distributions to be paid upon successful refinancing of bridge financing anticipated Nov-19 (Yr. 2)
3. Based on NOI over 5 year fund life. Pre-tax, post fees
4. Based on NOI however both market and Purchase Price was closer to 5.5%
5. Reduced occupancy due to higher number of apartments taken offline to execute refurbishment strategy
TRACK RECORD
DOMUS US MULTIFAMILY REAL ESTATE FUND NO.1
HIGHLIGHTS
Page 10
TRANSACTION TIMETABLE
Page 10
INDICATIVE OFFER DATES
Given the expected high level of investor demand, selected investors will be able to secure an equity stake in the Fund prior to the official Offer launch
Offer Summary andTimetable^
Domus 2 Portfolio Secured and Deposit Paid 5 July 2019
Offer Open 16 September 2019
Offer Close 11 October 2019
Equity Call and Allocation of Units 15 October 2019
Acquisition Closing Date / Financial Close 22 October 2019
Further InformationFor further information about the Offer process
pleasecontact:
Les Koltai – Managing Director, LS GlobalAdvisors
Phone: +61 408 900 344
Email: [email protected]^ Offer dates are indicative only and the Manager reserves the right to amend the timetable at anytime at its sole
discretion
Domus 2
Page 11
FREQUENTLY ASKED QUESTIONS
Explain level of fees/promote
structure - hurdle rates: Profit
Split to Manager
• A tremendous amount of work was associated with bringing not only good assets to investors, but the financing, underwriting and due diligence, etc. Together with our US partners Geringer
Capital, we have been working on Domus US Multifamily Real Estate Fund No.2 (Domus 2) for over a year and through the reputation we have built, long standing relationships in the broking
and multifamily financing industry. We have the responsibility of overseeing the improvement of over 442 units over a very short period of time. At the same time, Geringer’s relationship and
reputation with the debt financiers including through Domus 1 is instrumental in securing the long-term flow fixed rate non-recourse no covenant loans currently available to qualified investors
such as Domus. The unique value the team brings is what makes this transaction possible
• As an alternative to having a series of up-front fees, LS Global and Geringer Capital have agreed to back-end compensation for the past work but also for work over the initial 12-18 months. In
addition to waiving acquisition fees and waiving project management fees for overseeing the refurbishment we are partially deferring our asset management and thereby we are putting our time
at risk side by side with investors rather than taking fees on the front end. This clearly shows our confidence in the plan, the assets, and our own ability to perform
• The actual level of the US AM fee of 6% of NOI is comparatively below most other deals (some are based on Gross Asset Value, others take fee for acquisition, some take 10% of construction in
addition to other fees)
• The hurdle rates and promote structure reflect the fact that the upfront fee structure is light and the asset management fee structure is partially deferred with all the upside back ended. This was
intentionally done to align interest with our investors
• Overall the fees are in line or below market for a very active hands on management of an operating business comprising 442 apartments undergoing a refurbishment program over 18 months
What is the Manager’s relevant
experience in US multifamily?
• Both Geringer Capital and LS Global Advisors separately and collectively have an established successful track record investing in US real estate including US multifamily. In addition to the a
range of previous multifamily investments developments and investments by Geringer Capital and LS Global Advisors as well as LS Global’s Memory Care US Real Estate Fund launched in
2017, our relevant experience is best illustrated by Domus US Multifamily Real Estate Fund’s recent investment and performance of Domus US Multifamily Real Estate Fund No.1 (Domus 1)
where a portfolio of 8 high quality value-add assets across 4 states were acquired in 2017 for US$161m. This portfolio has recently (Q2 2019) been re-appraised by an independent third party
Appraiser to the value of ~US$244m
• Domus 1 is on target for 25%+ IRR and to repay 100% of investors equity in Q4 2019 on completion of HUD refinancing
• Domus 1 is now closed to new investors, with the majority of equity raised from Australian wholesale HNW investors
What is the Managers’ experience
in the Phoenix, Arizona market?
• For Domus US Real Estate Fund investments, LS Global Advisors and Geringer Capital have focussed on particular US markets exhibiting strong demographic and positive economic trends.
Phoenix Arizona is such a market where we not only have strong conviction for but we also have relevant recent successful experience. 3 of the 8 assets in Domus 1 are located in Phoenix sub-
markets so not only are we well acquainted with that market and have relationships with the property managers and also contractors to be engaged for the refurbishment works to be undertaken
for Domus 2, the particular Domus 1 assets have performed very strongly as demonstrated by the significant increases in value and favourable refinancing terms we have recently secured
• Ventana Palms, Phoenix, Arizona was acquired in Dec 2017 for US$14.25m and re-appraised for refi purposes in Dec 2018 for US$18.6m representing a 31% uplift in value
• Waterstone, Mesa, Arizona was acquired in May 2017 for US$28.15m and re-appraised for refi purposes in June 2019 for US$44.1m representing a 57% uplift in value
• Park Village, Mesa, Arizona was acquired in May 2017 for US$9.375m and re-appraised for refi purposes in July 2019 for US$17.5m representing an 87% uplift in value
Domus 2
Page 12
FREQUENTLY ASKED QUESTIONS
At 65% LTC, how is the high
leverage manageable?
• US multifamily has a long history of stable returns including during the 2008 US Housing and Financial Crisis. Since the Crisis the asset class has enjoyed above average returns and has
outperformed when compared to other US real estate classes due to high occupancy levels. US lenders have over a long period favoured lending on multifamily development and investment
because of its stable and consistent performance over a long period of time and is the most banked asset class. Because of this and unique to multifamily real estate investment, there is in the
US access to long term, low cost fixed rate interest-only non-recourse and importantly ‘no covenant’ debt meaning there aren’t the usual ongoing LVR and ICR tests. Attractive financing options
are available through banks, funds, insurance companies, pension funds, private lenders as well as US Government insured or guaranteed debt under Freddie Mac, Fanny Mae and HUD
• These gearing levels are common and appropriate for US multifamily investments. Debt leverage is high by Australian standards but it needs to be understood multifamily debt finance we are
securing for Domus 2 does not carry the short term re finance risk that Australian commercial loans do. Loans of this tenor (10-15 years) with fixed rates and interest only periods as well for what
is effectively commercial real estate are simply unavailable in Australia. Commercial Real Estate Loans in Australia are 3 -5 years at most and at the end of that period the assets need to be
refinanced at unknown interest rates and terms
What is the risk from competition
and oversupply in these
markets?
• We are deliberately investing in established B grade assets in ‘in-fill’ areas (close to transport, shops, schools, amenities) as that is where there is the highest demand. Our assets are neat tidy
and functional are considered ‘work-force’ housing for young professionals, teachers, nurses, tradesmen, young families etc. who are typically sensitive to location and price-point. The rent price
point is a key right now given affordability and given they are mostly in-fill, they are already high performers with in excess of 90% occupancy
• The only sector risk is over supply of new units, which is not a concern to our assets as we not targeting tenants that can pay the prices that new rental product demands. By being in those
locations in that category of asset, we are not likely to have new projects built in the vicinity as new product tends to be built further out. New product simply will not be as affordable for our target
tenants as development is only economically viable at higher rents
In simple terms, how does the tax
structure work for Australian
investors?
• We have tax flow through in the sense that investors receive credits to the extent of withholding tax at 30% paid by the Aus. fund withheld at the US level
• Potentially there are tax credits trapped on sale for capital gain, but as capital gains tax rates have reduced to 21% then the impact is reduced. Distributions for the first number of years are partly
tax sheltered due to the interest and depreciation deductions from the value add/refurbishment expenses
APPENDICES
Equity Capital Raise for Domus US
Multifamily Real Estate Trust No. 2
▪ A declining unemployment rate and steady
unemployment forecasts indicates the potential of
easier access to jobs and higher discretionary
spending for US consumers
▪ Fundamentals for sustained and solid consumer
spending remain sound with real consumption
running at a 4.2% annual pace2
▪ With unemployment at a multi-decade low at 3.6%
and wage growth at 3.0-3.5%2, a domestically
generated recession remains unlikely
▪ US Treasury Rates at a multi-year low of 1.94%
will stimulate discretionary spending in the US
with solid earnings growthexpected
▪ Despite a resurgent US Economy and an uplift in
GDP due to the recent tax cuts, trade developments
continue to play a major role in shaping sentiment
over the US future economic outlook
▪ Higher energy prices have led to a gain in the
Consumer Price Index (CPI) but outside of energy,
price gains were more modest and there is no
expected increase in core inflation over the next two
years
▪ With already historically low interest rates, NAB
expects US Federal Government to further cut interest
rates by 50-75bps2 over the next threequarters
9.3% 9.6%8.9%
8.1%7.4%
6.2%5.3% 4.9%
4.4%
3.0%3.6% 3.6% 4.0%
4.5% 4.8% 4.8% 4.8% 4.8% 4.8% 4.8% 4.7%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019F 2020F 2021F 2022F 2023F 2024F 2025F 2026F 2027F 2028F
2029F
1.6%
2.2%
2.9%2.4%
1.7% 1.7%
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
2016 2017 2018 2019F 2020F 2021F
INFLATION, FED FUNDS AND 10 YR
BOND RATE (%)2
1.90%
2.50%
2.00%
2.00%
2.00%
2.70%
1.90%
1.70%
2.30%
2.00%
2.40%
1.50%
1.80%
2.10%
2.40%
2.70%
3.00%
2018 2019F 2020F 2021F
Core Inflation Fed Funds Rate 10-Year Bond Rate
Page 14
Despite a resurgent US economy, trade developments continue to play a major role in shaping consumer sentiment
COMMENTARY US UNEMPLOYMENT RATE (%)1
APPENDIX
US ECONOMIC OVERVIEW
ANNUALISED GDP GROWTH
RATES (%)2
1. Source: Bureau of Labor Statistics
2. Source: NAB Group Economics – US Economic Update June 2019
1 Strong Employment, Migration and Population Growth1
-6.0
-4.0
-2.0
-
2.0
4.0
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Annual Net Migration Annual Job Growth
Annual Population Growth
2 Decreasing Home Ownership Rates1
30.0
40.0
50.0
60.0
70.0
80.0
90.0
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Total Under 35 years 35 to 44 years
45 to 54 years 55 to 64 years 65 years and over
3Sector Underpinned by a Variety of Attractive Debt
Funding Options4 Favourable Regulatory Environment
• Multifamily is one of the only sectors that benefits from
US Federal Government guaranteed debt financing
options including HUD financing and Agency loann
• Fund options provide for long term, non-recourse, no
covenant financing with low fixed interest rates
• Interest only periods of up to 7 years (Agency loans)
• Refer to page 8 for further information
• US Federal Government and State Government
provides attractive tax incentives to major corporates
and multinationals to relocate its headquarters to
submarkets such as Phoenix, Arizona driving further
employment opportunities and housing demand in an
undersupplied housing market
• The state of Arizona benefits from no corporate franchise
tax, worldwide unitary tax, sales tax on manufacturing
equipment or inventory tax. Arizona is also a “right-to-
work” state with low workers' compensation and
unemployment insurance costs
• Arizona individual income taxes brackets are some of the
lowest in the US ranging from 2.59% to 4.54%
APPENDIX – MARKET OVERVIEW
Driven by strong fundamentals, multifamily is the strongest performing US real estate sector over the last 25 years
LTM Sales
US$175.2bn
Cap Rate
5.39%
Rent Growth YoY
3.0%
No. of Units Delivered
301,210
No. of Units Absorbed
299,310
International Acquisitions
US$14.7bn
Multifamily Mortgage
US$1.4tn
Multifamily represented
the highest sales volume
of all property types
National cap rates
tightened by 2bps QoQ
YoY increase in rent
growth led by Las Vegas,
Phoenix and Orlando
Phoenix has added
8,344 new units in the
past year
Nashville and Charlotte
have experienced the
highest demand
Increasing international
interest in non-major
markets
Acquirers taking
advantage of HUD and
agency financing
mill
ion
sKEY DRIVERS OF MULTIFAMILY REAL ESTATE
US NATIONAL MULTIFAMILY SNAPSHOT2
1. Source: Bureau of Labor Statistics
2. Source: Newman Knight Frank: Q1 19 Multifamily Update
Page 15
4.6%Vacancy rate (down 20bps YoY)
3.3%YoY rent growth (up 90bps YoY)
INVESTMENT VOLUMES1
PROPERTY MARKET INVESTMENT MARKET
$175 bnTransaction volume over past 12 months
(up 8.1% YoY)
$14.6bnCross-border investment over past 12
months
Sources - CBRE Research, Real Capital Analytics, Q1 2019; CBRE Research, US Multifamily Housing, A Primer for Offshore Investors Q4 2017, JLL Q1 2019 Multifamily; JLL Q1 2019 Multifamily Investment1 Class B assets are assets that contain one or more of the following factors: age, location, limited amenities, deferred maintenance providing a value add strategy. The Domus 2 portfolio would be considered Class B assets
DEMAND
• National vacancy dropped to a 4.6% (down 20 bps YoY)
• Absorption of 285,800 units over the past 12 months, outpaced completions
(266,700 units) by 7.2%
• National effective rent growth rose to 3.3%, (up 90 bps YoY)
TRANSACTIONS
• The multifamily sector was the only US asset type to post YoY gains, lifting its share
of total US real estate transaction volumes to 41.5%
• Cap rates compressed by 17bps YoY in Q1, showing further evidence of investor’s
sustained interest in the sector and willingness to purchase at higher prices
INVESTMENT
• Portfolio sales comprised 25.4% of multifamily activity over the past 12 months (the
largest share since 2016), as investors seek to gain exposure to the sector at scale
• Private investment represented 72.2% of total multifamily volumes in Q1 2019
Rising appetite for midrise assets contributed to the increase in private capital, as
Class B1 assets are expected to outperform other asset classes in the mid-term
CROSS-BORDER INVESTMENT
• At near record levels of $14.6 billion YoY
• Canada, Bahrain and Singapore-based investors drove continued investment,
contributing 67.5% of quarterly foreign capital
APPENDIX – MARKET OVERVIEW
US MULTIFAMILY MARKET Q1 2019 SECTOR PERFORMANCE
Building on a record-breaking 2018, US multifamily investment is experiencing its most active start to a year, with $38.3 billion in transactions in Q1 2019,
up 1.3% year-over-year
Page 16
DEMOGRAPHIC TRENDS1
Population
4.7 million
Median Household Income
US$59.1k
Homeownership Rate
67.4%
YoY Employment Growth
+53,800
• Phoenix led the US multifamily market for annual
rental growth in Q1 2019, with an 8.0% uplift
approximately 5.0% above the annual national
average
• Steady occupancy rates and strong rental growth,
driven by population and employment growth
presents Phoenix as an attractive city for residents and
investors
• Phoenix remains a growth hub with nearly every
industry outperforming peer markets with
acceleration most pronounced within the hospitality,
construction, technology, manufacturing, healthcare,
education business & financial services sectors
• Employment growth increased by 90bps over the last
12 months to 3.7%, twice the growth rate of both the
National and Western States
1 – Source: JLL Research Report: Multifamily Market Research & Trends, CBRE Research Q1 US Multifamily Figures
APPENDIX – MARKET OVERVIEW
PHOENIX, ARIZONA
Robust population growth, low unemployment, professional opportunities and relative affordability has transformed Phoenix as a top-performing
multifamily city
COMMENTARY MARKET SNAPSHOT & FUNDAMENTALS1
Page 17
Absorption 11,508 +2,103 units 6,546
Vacancy Rate (%) 4.9% -110 bps 5.4%
Effective Rent US$1,056 +US$69 $808
Effective Rent Growth (%) 2.7% +32 bps 1.8%
Completions 8,344 -313 units 4,405
Avg. cap rate - Trailing 12 mths 4.9% -20 bps 5.1%
Q3 2018 (12m trailing) 12-month change 10-year average
APPENDIX
ASSET LOCATION
Both assets are located in submarkets near the Phoenix CBD
PHOENIX ARIZONA
Page 18
Phoenix, Arizona
PHOENIX SUBMARKETS
Phoenix CBD
Mesa, Arizona
Queen Creek,
Arizona
APPENDIX
TOWN CENTER DETAILED OVERVIEW
Town Center Apartments
Queen Creek, Arizona
US$33.50m 176 2009 $1,476
LocationPurchase
PriceNo. of Units Year Built
Avg-rent /Unit2 (US$)
1. Source: ABIMultifamily
2. Per Month
• Queen Creek – the submarket where the Project is based –
has enjoyed an average population growth of 7.4% p.a. over
the 2013-2017 period, and boasts a very high median
household income of $92,9171
• Between late 2016 and January 2019, four major projects
totalling more than $52M in development costs were
completed. These consisted of one road project, a park,an
elementary school and an automotive dealership.
• A diverse employment base and offices of notable US
institutions such as Park University, Deloitte, Lockheed
Martin, Phoenix-Mesa Gateway Airport and SkyBridge
Arizona
• Queen Creek has quietly worked toward sustainable growth
and expansion since adopting a new Economic
Development Strategic Plan (EDSP) in late 2015
• Town Center is strategically located next to the Downtown
Gilbert Heritage which is a pedestrian-friendly area filled
with local restaurants, unique shops, scenic parks and
cultural attractions such as museums and theatres
• Queen Creek is positioned to benefit from some of the
strongest multifamily fundamentals in the country. The
Phoenix economy added ±65,000 jobs YoY through
December 2018, which ranked #5 among all US markets1
Town Center is strategically located next to Arizona State University, a number of retail shopping centres, golf clubs and schools
QUEEN CREEK, ARIZONA ASSET INFORMATION
Page 20
ASSET PHOTOS ASSET LOCATION
APPENDIX
AVIA 266 DETAILED OVERVIEW
• Expected population growth of approx. 120,000 p.a. new
residents through to 2026 driving a demand for additional
housing supply
• A diverse employment base and offices of notable US
institutions are situated in close proximity to high-tech,
financial services and healthcare firms
• Renter population growth combined with a lack of new
supply in the submarket is resulting in above-trend rent
growth with no new multifamily communities under
construction or planned in Mesa
Avia 266 Mesa, Arizona US$45.25m 266 1984 $1,064
LocationPurchase
PriceNo. of Units Year Built
Avg-rent /Unit1 (US$)
Sub-markets in Mesa, Phoenix provide exception employment opportunities and population growth well in excess of the national average
MESA, ARIZONA ASSET INFORMATION
ASSET PHOTOS ASSET LOCATION
• Annualised rent growth in Mesa is projected at 7.9% through
2019 and a favourable operating environment
• Close to major transportation & infrastructures corridors,
employment & education hubs. It is a desirable and
preferred location for residents
• Avia 266 is positioned to benefit from some of the strongest
multifamily fundamentals in the country. The Phoenix
economy added ±65,000 jobs YoY through December 2018,
which ranked #5 among all US markets
• Multifamily rents in Northwest Mesa grew 9.4% in 2018 and
submarket occupancy exceeded 96% as of Q4’18
• Avia 266 is in close proximity to a number of retail and
entertainment venues including Sloan park, Mesa Riverview,
Tempe Marketplace and Mill Avenue Entertainment District
1. Per Month
Page 21
APPENDIX
Page 21
INVESTMENT STRUCTURE
Level Australian tax treatment/considerations US tax treatment/considerations
Australian investors
• Subject to Australian income tax (at marginal tax rates) on their share of the taxable
income of the Fund, primarily comprising income and capital gains from the Portfolio
• Should generally be entitled to a foreign income tax offset (FITO) for any US tax paid
by the Fund (e.g. on distributions of income and capital gains from the Portfolio) or a
lower tier US entity. The amount of the FITO that can be used by an investor will
depend on various factors such as the amount of foreign taxes paid by the Fund, the
types of income derived by the Fund and the marginal tax rate of the investor
• Should not be liable to US tax in respect of the income and capital gains from the
Portfolio
Domus Multifamily
Real Estate Trust No.
2 (the “Fund” or
“Domus 2”)
• Should not be subject to Australian income tax, assuming that investors will be
'presently entitled' to (i.e. distributed) all the income of the Fund each year
• If a managed investment trust, the Fund should make the capital account election for
the Fund's shares in Domus Hold Limited Liability Company, in its first financial year
• Subject to US tax (at graduated rates of up to 21% (plus state and local taxes) on
its share of the income and capital gains from the Portfolio, regardless of
distributions from Domus Hold Limited Liability Company
• Tax losses may be used to shelter income in future years from US taxation.
• Required to lodge annual US federal income tax returns
Domus Hold Limited
Liability Company
(“Domus HoldLLC”)
• If Domus Hold LLC is a "controlled foreign corporation" (CFC) (i.e. controlled by the
Fund or other Australian residents), it should automatically qualify for "pass-through"
(i.e. partnership) treatment for Australian income tax purposes
• If not a CFC (i.e. is controlled by foreign residents), the Fund will need to make a
foreign hybrid election for its interest in Domus Hold LLC, in order for Domus Hold
LLC to qualify for the "pass-through" treatment
• Should not be liable to US tax on the income and capital gains from the Portfolio -
"pass-through" vehicles for US federal income tax purposes (either check-the-box
partnership treatment or disregarded entities)
• Domus Hold LLC would need to satisfy quarterly withholding and annual reporting
obligations, for the Fund's and Domus Cayman's share of income and capital
gainsOperating
Subsidiaries
• As above, should qualify for "pass-through" (i.e. partnership) treatment for Australian
income tax purposes, either automatically or via an election made by Domus Hold
LLC (if not a CFC)
Portfolio
• Will need to invest in property for the primary purpose of deriving rental income (vs.
gain on sale), to ensure the Fund retains its "pass-through" status for Australian
income tax purposes
• Should give rise to US effectively connected income, taxable in the hands of the
Fund as outlined above
Key Australian and US tax considerations1
1. Holding and investment structure available on page 23
APPENDIX
HOLDING AND INVESTMENT STRUCTURE
Domus Multifamily Real Estate Trust No. 2 (the ‘Trust’)
Investment structure
Page 22
• The Trust has been established for the acquisition of the
Properties via the structure noted above. The Trust is a 5 year
wholesale unit trust in which all equity will be invested
according to the total equity requirement.
• Investors will be required to invest in USD currency with
investment returns provided and distributed in USD according
to the total equity requirement. A further two, one year options
will be available to extend the Initial Term by standard
resolution. The Trust will be a closed-end Trust.
• Domus II, LLC which will acquire the properties through wholly
owned subsidiaries.
• Collectively, the LS Global Advisors and Geringer Capital will
maintain a cornerstone stake of no less than 5% of the total
equity requirement in the investment.
• Investors will be required to open a US dollar bank account in
order to invest into Domus 2 and receive quarterly
distributions.
Note: For Fannie Mae, Freddie Mac, CMBS if we bring leverage down to 65% LTV we may be able to attain Full Term Interest Only
* High barriers to Management approval of financing. Manager subject to strict pre-approval and ongoing monitoring regulatory requirements
LTV 80% 65-75% 80-85% 70-75% 80-85%
Term 5,7,10,12yr (Options) 5 & 10yr (Options) 1-3yr (W/ extension Options) 5,7,10 35yr
Fixed Rate Yes Yes Yes Yes Yes
Amortisation 30yr 25yr- 30yr No 30yr 40yr
I/O Periods 5-7yrs 1-3yrs (up to 10 yrs) Full Term 1-5yrs (dependent on Term) None
Non-Recourse Yes Yes Yes Yes Yes
No Covenant Deal Dependent Deal Dependent Deal Dependent Deal Dependent Deal Dependent
Assumable Yes (after Year one) Yes Generally Yes Yes
Application to Close Period45-60 days (Dependent on
3rd parties and Legal)
45-60 days (Dependent on
3rd parties and Legal)
30-45 days (Dependent on
3rd parties and Legal)
45-60 days (Dependent on
3rd parties and Legal)
60- 90 days (Dependent on
3rd parties and Legal)
Post-Close Obligations:
Light/moderate/heavy*Moderate Moderate Light heavy Moderate
Current Rate Range 3.8- 4.2% (Todays Market) 3.9- 4.5% 5%- 6.5% 4.25%- 4.75% 3.4%- 4.2%
Current Spreads 165- 200bps 180- 220bps 190- 275bps 175- 210bps 155- 200bps
Agency Freddie Mac /
Fannie Mae
Life Company / Pension
FundDebt Funds CMBS FHA – Hud Market Rate
Domus 2 preferred financing structures which are both guaranteed by the US Federal Government
APPENDIX
US MULTIFAMILY DEBT FINANCING OPTIONS
The range of unique and attractive funding options in an important feature underpinning the US Multifamily real estate sector
Page 23
LES KOLTAI
LS Global Advisorswww.lsglobaladvisors.com
APPENDIX
INVESTMENT MANAGERS – DETAILED BIOS
▪ Les Koltai, the founder of LS Global Advisors in 2016,
has 30+ years industry experience in real estate/cross-
border transactions as a partner in international law-
firms
▪ Les remains a Real Estate Partner for DLA Piper,
international
▪ Who’s Who Legal - Awarded 2018 Most Highly Regarded
Real Estate Lawyer for both domestic and international /
cross-border transactions
▪ Ranked leading lawyer in Best Lawyers survey 2019 (Real
Estate & Funds Management)
▪ Advisor to major domestic & international corporations,
institutional investors, PE firms, fund & investment managers
across APAC, US and Europe
▪ Demonstrated ability & proven track record to deliver returns
in real estate investments
▪ Ability to access unique off-market opportunities through
deep international investor network
▪ 7+ years working relationship with US Asset & Investment
Manager, Geringer Capital
CASE STUDY – MEMORY CARE US REAL ESTATE FUND
▪ The 3 facilities comprising the Initial Memory Care Portfolio acquired in May 2017 and
March 2018
▪ Assets acquired at a 7.5% (unlevered) cap rate with 25 yr triple-net leases in place to
experienced and well-known operator Spring Hills
▪ Current annualised distribution yield of 11.5%, paid quarterly
▪ Forecast IRR exceeding 14.0% over a 5-year period
▪ Benefit from acquisition finance of 75.0% LTV fixed at 4.0%pa (I/O)
▪ Strategy to refinance with low fixed rate, long term loan debt (including HUD financing after
36 months from financial close) with current fixed rates at approximately 3.4%-4.2%pa and
up to an 80.0% LTV
▪ Forecast to return up to 37.0% (estimated) of original investment to investors in 36-48 months
Poet’s Walk, San
Antonio
Poet’s Walk,
Leesburg
Poet’s Walk,
WarrentonTotal / Average
Year Built 2015 2018 2018 2017
# of Units 60 60 60 180
# of Beds 68 68 68 204
Occupancy 97.0% 75.0% 83.0% 85.0%
Avg. Rent/Mth $5,672 $7,564 $7,493 $6,910
Q1 2019 INVESTOR UPDATE: ASSET PERFORMANCE
Page 24
Les Koltai, the founder of LS Global Advisors, has 30+ years industry experience in real estate/cross-border transactions as a partner in international law-
firms
Australian Investment Manager
ROBERT GERINGER
Geringer Capitalwww.geringercapital.com
▪ Robert Geringer is a LA based industrial and residential
real estate owner, developer and manager with a
specific focus on US multifamily real estate sector
(construction, development, financing, management)
▪ Licensed attorney with 30+ years industry experience with
operating experience in real estate development, finance,
tax, syndications and real estate structuring
▪ Demonstrated track-record in delivering & managing large-
scale multifamily assets with US$600m+ AUM with a stable
management team (12 + years)
▪ Approved by Department of Housing & Urban Development
(HUD) as developer and manager to secure HUD
Government financing
▪ Developed of over 350,000 square feet of industrial space
and over 640 multi-family units and subdivided of over 800
single family lots
▪ Strong demonstrated experience in the development,
management, and continuing operation of commercial,
residential and multifamily real estate projects in California,
Tennessee, Utah, Arizona, Mississippi, New Mexico, and
Texas
▪ For over fifteen years, Robert Geringer has identified and
operated numerous sizable real property investments and
has partnered with some of the world’s largest family
offices
US ASSET & INVESTMENT MANAGER
APPENDIX
INVESTMENT MANAGERS – DETAILED BIOS
SELECT PROJECT DETAILS
Project Year Details Location Sector Development Financing
Domus
Multifamily
Portfolio
2017 1,296 Unit Numerous MultifamilyValue-add
refurbishment
Private equity (from US /
Australia) + Geringer
Capital resources
Cascadia 2016280 Unit,
Class A
San Antonio,
TX.Multifamily
Raw land to
end productHUD financed
Walker Zanger 2016 130,000 SFNorth Hills,
CA
Office /
Warehouse
Raw land to
end product
Conventional bank
finance + Geringer Capital
resources
The Falls at
Westover Hills2009
394 Unit,
Class A
San Antonio,
TXMultifamily
Raw land to
end product
Conventional bank
finance + Geringer Capital
resources
The Munchkin
Building2004 126,00 SF
North Hills,
CA
Office /
Warehouse
Raw land to
end product
Conventional bank
finance + Geringer Capital
resources
Hill Country
Villas2002
240 Unit,
Class A
San Antonio,
TXMultifamily
Raw land to
end product
Originally HUD financed
and refinanced with
Fannie Mae in 2008
Fedex
Distribution
Center
1998 132,000 SF North Hills,
CA
Office /
Warehouse
Raw land to
end product
Conventional bank
finance + Geringer Capital
resources
Page 25
Robert Geringer is a LA based industrial and residential real estate owner, developer and manager with a specific focus on US multifamily real estate sector
(construction, development, financing, management)
APPENDIX
KEY RISKS
It is recommended that investors obtain independent financial and taxation advice prior to investing in the Fund
▪ Investors should be aware that the value of future distributions and total returns may be influenced by a number of factors. Some general and more specific risks are considered below
▪ It is recommended that investors obtain independent financial and taxation advice before investing in the Fund. The mitigating factors listed below should not be viewed as eliminating any of the risks. The
impact of market wide risks affecting assets broadly are not able to be mitigated by the InvestmentManager
▪ These risks are not exhaustive and the mitigating factors discussed below should not be viewed as eliminating the risks
GENERAL RISK
▪ An investment in the Trust is subject to general risks associated with any investment in a property fund
▪ These include the following risks:
The risk that an investor’s objectives will not be achieved by the overall performance of the Fund
The risk that the Fund or the Investment will be adversely affected by changes in laws, including tax laws and regulatory changes
The risk of a downturn in the economy and/or the property market affecting the value of the assets. Natural and non-natural disasters, includes but not limited to earthquakes, bush fires, floods, social unrest,
terrorist attack or war in Australia, the United States or another location
FUND RISK
▪ For the term of the Fund, Units in the Fund will be illiquid and there will be no secondary market for the sale of a unitholders interest in the Fund
▪ Fund risk refers to specific risks associated with the Fund, such as termination and changes to fees and expenses. The Manager may close the Fund to further investments if, for example, we consider it
appropriate given the investment objective and investment strategy of the Fund. We may also terminate the Fund by notice to Unitholders
▪ Your investment in the Fund is governed by the terms of the Constitution for the Fund, as amended from time to time. There is also a risk that investing in the Fund may give different results from holding the
underlying assets of the Fund directly because of income or capital gains accrued in the Fund at the time of investing
▪ The Investment Manager aims to manage these risks by monitoring the Fund and acting in investors’ best interests. Winding up the Fund will result in realisation of tax positions (both income and capital) at
that time. There can be no assurance that the Fund’s investment objective will be achieved, or that a Unitholder will receive a return on their investment. An investment in the Fund should only be undertaken
by investors that have the capacity to withstand a partial or even complete loss of their investment and who have a capacity to assess and assume risk. There may be times when your investment in the Fund
may be illiquid. There may also be occasions when the Investment Manager and its affiliates encounter potential conflicts of interest in relation to the Fund
Page 26
APPENDIX
Page 27
KEY RISKS
FUNDING RISK
▪ The Manager will be required to obtain debt financing in order to acquire the Domus 2 portfolio. The debt facility will be secured against the assets of the Fund and the facility will incur interest costs
▪ An inability to obtain the necessary debt funding on acceptable terms and at commercial rates or a material increase in the cost of such funding may have an adverse impact on the financial performance of the
Fund. Further, some of these debt facilities are subject to various covenants (although limited in nature) including interest coverage ratios and debt service coverage ratios. The use of debt funding may
enhance investor returns however it may also increase the risk of loss. If an investment is unable to generate sufficient cash flow to meet the interest only (years 1-5) and principal (from year 6) payments on its
indebtedness, the borrower may be in default and the financier may want to enforce its security of the borrower. These events could require repayment of the debt facility, possibly prior to the expect expiry
MANAGER RISK▪ Investing in the Fund means investors [unitholders] are delegating their control over some investment decisions of the Manager
▪ How the Fund performs depends party on the performance of Domus Investment Management as Fund Manager, LS Global Advisors as advisor, Geringer Capital as Asset Manager, AMC as Property
Manager, Eticore as Fund Administrator, Domus Multifamily Pty Ltd as Trustee and the performance of any external service providers engaged by the Trustee and/or LS GlobalAdvisors
FOREIGN INVESTMENT RISK▪ The Fund may, through its foreign investment and exposure to a foreign currency, have exposure to risks not usually associated with investing in Australia such as political, social, and economic instability,
difficulty in enforcing legal rights, unforeseen taxes and less stringent regulatory protections, reporting and disclosure. These factors may affect the value of the Fund, volatility of the Fund’s returns and liquidity
of the Fund’s investments
MARKET RISK▪ Generally, the investment return on a particular asset is correlated to the return on other assets from the same market, region or asset class. Market risk is impacted by broad factors such as interest rates,
availability of credit, economic uncertainty, changes in laws and regulations (including government responses to financial crises and laws relating to taxation of the Fund’s investment), trade barriers, currency
exchange controls, political environment, investor sentiment and significant external events (e.g. natural disasters)
CURRENCY RISK AND HEDGING▪ Investing in the Fund means investors [unitholders] are delegating their control over some investment decisions of the Manager
DISTRIBUTION RISK▪ There is no certainty that the Fund will pay distributions at the rate and period forecast within the financial information as a result of factors outlined within this Section
PROPERTY LIQUIDITY▪ The assets to which Domus 2 and the Manager are exposed are, by their nature, illiquid in nature. There is a risk that the Manager will not be able to realise the assets within a short period of time or may not
be able to realise the assets at valuation including selling costs, which could materially affect the financial performance of the Fund
DOMUS 2
Page 28
DISCLAIMER
ImportantNotice
The attached presentation materials (Materials) are confidential and have been prepared jointly by by LS Global Capital (Australia) Pty Limited ACN 152 430 521 (LS Global Advisors) and Domus Multifamily Investment Management (Australia) Pty Limited ACN 618 091
928 (Domus Investment Management) and made available to you (Recipient) for information purposes only without taking account of your or any particular person’s objectives, financial situation or needs. The Information contained in the Materials is subject to change
without notice.
By accepting, retaining or using a copy of the Materials, each Recipient acknowledges that it understands the contents of this Disclaimer and Important Notice (Notice), agrees to abide by the terms and conditions of this Notice, makes the acknowledgments,
representations and agreements contained in this Notice and agrees that the Materials must be kept confidential and not disclosed to any person. The Materials have not been lodged, filed, registered, notified, published or approved in any jurisdiction. Each Recipient
acknowledges that it is a sophisticated institutional investor/counterparty/acquirer. The Materials have been prepared solely for information purposes and outline background information only in relation to the project, assets, business, shares and/or units described
(Assets) and the opportunity to engage in a potential transaction in connection with the Assets (Potential Transaction) for consideration and assessment by the Recipient. The Materials are intended to provide the Recipient with high level information only concerning the
Assets to allow the Recipient to consider whether to conduct their own comprehensive investigations and due diligence enquiries into, and receive their own independent advice in connection with, the Assets, with a view to entering into a Potential Transaction. The
Materials are not, and are not intended to be, an information memorandum nor a product disclosure statement, prospectus, short form prospectus or profile statement as those terms are defined in the Corporations Act 2001 (Cth) nor any disclosure document required
pursuant to the laws of any jurisdiction (whether Australia or otherwise). Nothing contained in the Materials constitutes investment, legal, tax, financial or other advice.
The Materials do not in any way constitute in any jurisdiction an offer to the Recipient or any other person, nor a commitment to make an offer of any sort, including an offer invitation, solicitation or inducement for the provision of financial accommodation (in any form), nor
the issue, sale or purchase of any securities, financial instruments, assets or businesses (including the Assets) or otherwise, or any recommendation in relation to the provision of financial accommodation (in any form), investing in, or acquiring any securities, financial
products, assets or businesses (including the Assets) or to engage in or refrain from engaging in any transaction whatsoever, and the Materials will not form the basis of any contract or commitment whatsoever. Any transaction will only be able to be entered into on the
basis of definitive transaction documentation to be negotiated and agreed directly between the Recipient, , LS Global Advisors, Domus Investment Management and the relevant counterparty(ies). It is not the intention of LS Global Advisors, Domus Investment
Management to create legal relations on the basis of the Materials.
LS Global Advisors, Domus Investment Management or their respective officers, directors, employees, agents, advisers or associates (Domus Group) guarantee the performance of the Assets or any debt, loan, financial accommodation, security, financial product, asset or
business, or any particular rate of return, forecast, target or forward looking statement, whether referred to in the Materials or otherwise, nor take responsibility for the Materials or their contents. Securities and financial products in or any financial accommodation to, any
entity described in the Materials or in any of its related bodies corporate or affiliates are not an investment in, a deposit with, or other liability of LS Global Advisors, Domus Investment Management or any other company in the Domus Group and such financial
accommodation, investments or acquisitions, if made, will be subject to investment risk, including possible delays in repayments and loss of all or part of income or capital invested or principal committed. Neither and LS Global Advisors, Domus Investment Management
nor any other company in the Domus Group in any way stand behind the capital value, nor does it guarantee the performance, of any financial accommodation, investment, assets or business described in the Materials or the Assets, including, as to any capital, principal,
income or other distributions. LS Global Advisors, Domus Investment Management also do not, nor do any other company in the Domus Group, provide a guarantee or assurance in respect of any financial accommodation, investment, assets or business described in the
Materials, the Assets, their issuers, the legal or beneficial owners of the Assets, their respective related bodies corporate or the underlying entities, properties or projects to which the Assets provide economic or investment exposure.
The Materials may contain “forward looking statements” and have not been verified by Domus Group. These forward looking statements may be based upon certain assumptions. Actual events may differ from those assumed. All forward looking statements included are
based on information available on the date hereof and none of the Domus Group assumes any duty to update any forward looking statement. Accordingly, there can be no assurance that any forward looking statements will materialise or will not be materially lower than
those presented. Except where otherwise indicated herein, the information in the Materials is based on information available in the public domain as of the date of the creation of the relevant document and not as of any future date, and will not be updated or otherwise
revised to reflect information that subsequently becomes available, or circumstances existing or changes occurring after the date hereof. Where provided, forecasts and estimates of future performance are sourced from company and broker reports or other sources
available in the public domain. None of the Domus Group makes any representation or warranty, express or implied, as to the accuracy, reliability or completeness of any statement, view, opinion, or assessment or information in the Materials including, without limitation,
any target returns, forecasts (whether economic or otherwise) projections or other forward looking statements (whose preparation involves elements of subjective judgement and analysis). The information on which such statements are based has been derived from
sources in the public domain including company, broker and consensus reports unless otherwise indicated. These Materials do not purport to contain all relevant information and any statement as to any future matter is a present prediction of a possible future outcome,
the accuracy of which is not and cannot be guaranteed. Past performance is not a guide to future performance. The Recipient of the Materials should not rely on the contents of these Materials, but should make and rely on their own assessment and evaluation and
undertake their own investigations and inquiries and seek independent advice to enable them to make any decision concerning their own risk and in deciding whether to enter into any Potential Transaction. In particular, any person or entity that is not a resident of
Australia for tax purposes should seek their own tax advice on the local and foreign tax consequences of any Potential Transaction and its own legal, financial and other advice. Nothing contained in the Materials constitutes investment, legal, tax, financial or other
advice.
To the maximum extent permitted by law, Domus Group: (a) expressly disclaim all and any liability in connection with the Materials, including, without limitation, any express or implied representation for statements and conclusions contained in and omissions from the
Materials; (b) expressly disclaim all and any liability which may arise out of the provision to or use by any person of the information contained in the Materials or the preparation of the information contained in the Materials or otherwise arising in connection with the
contents of, or any omission from, these Materials; and (c) accept no liability (whether in negligence or otherwise) for any loss, damage, costs or expenses of any nature (whether direct, indirect, consequential or otherwise) which may be suffered or incurred by any
person relying on, disclosing or using any information or statement contained in, or otherwise arising in connection with, the Materials. None of the Domus Group have any liability to the Recipient or to any of the Recipient’s officers, directors, employees, agents or
associates, legal counsel or other professional advisers or to any other person for any damages, claims, costs or losses (whether direct, indirect, consequential or otherwise) resulting from the use of or purported reliance on, the information contained in the Materials,
or otherwise in connection with the Materials.
The Materials are strictly confidential and should not be disclosed to any other person reproduced or redistributed in any format without the prior consent of LS Global Advisors and Domus Investment Management. LS Global Advisors and Domus Investment
Management reserve the right at any time to suspend or terminate your access to or use of the Materials.
CONTACT DETAILS
Domus Investment Management (Australia) Pty Limited ACN 618 091 928, authorised representative for Domus Management Co. Pty Limited ABN 29 160 205 729 AFS Licence Number 431079
LS Global Capital (Australia) Pty Limited ACN 152 430 521, authorised representative for Emerald Partners Pty Limited ACN 107 969 433 AFS Licence Number 27115
Eticore SD Pty Limited ACN 613 933 645 AFS Licence Number 494275 Page 30
Further Information
For further information about the Offer process pleasecontact:
Les Koltai
Managing Director
LS Global Advisors
Phone: +61 408 900 344
Email: [email protected]
