Investor Update May 2019
Dear Investor, CFMG Capital are continuing to demonstrate the strength of our project delivery capabilities with both the Creeks Edge and Oakland Pocket developments having been successfully completed earlier than the forecast minimum terms and many of the satisfied investors now rolling over into the latest investment opportunities via the CFMG Land & Opportunity Fund. As an investor with us in the CFMG Capital Preference Shares should you wish to discuss the options available to you to take up an opportunity with us to roll over your current investment into the CFMG Land & Opportunity Fund and earn a fixed return of 12% per annum (net of fees) please do not hesitate to contact us. CFMG Capital achieved title registration at two separate projects in South East Queensland during the first quarter of calendar year 2019, after the single stage 57 lot residential community known as Oakland Pocket in Morayfield was completed during February 2019. Meanwhile, on the south side – the 75 lot Stage 1 plan, as part of the larger 336 lot Logan Reserve development known as Middleton Park also achieved title registration and initial settlement of allotment sales commenced during March 2019. On a personal note, during June 2019, for the second year running, I’ll be participating in the Vinnies CEO Sleepout and experiencing just a small portion of what it can be like to be homeless — a reality experienced every night by more than 116,000 Australians. Last year, with the support of our investors, clients, staff, consultants, suppliers and other business partners, CFMG Capital raised $17,347.80 to provide vital support services to those experiencing homelessness. We would love your continued support this year to reach our fundraising goal of $25,000. In the following update, you will find a summary of our current projects and current market update. In addition, future investment opportunities with CFMG Capital are outlined. To consider further investment with CFMG Capital via the CFMG Land & Opportunity Fund or to discuss the options available to you as an existing investor in the CFMG Capital Preference Shares to roll over your current investment into the CFMG Land & Opportunity Fund contact us on (07) 3613 0001 or investorrelations@cfmgcapital.com.au. We encourage you to access your Investor Portal for updates regarding your investments with us and the group’s projects. Simply visit cfmgcapital.com.au and log on using your personal access details. In the meantime, if you require anything from us, please don’t hesitate to contact us.
Scott Watson
CFMG Land & Opportunity Fund With an existing investor base of over 1,000 repeat investors, the latest investment opportunities with CFMG Capital via the CFMG Land & Opportunity Fund are proving to be attractive to many investors in the CFMG Capital Preference Shares with a significant proportion electing to roll over to achieve the higher rate of return offered. The CFMG Land & Opportunity Fund is an unlisted fund paying a fixed return of 12% per annum, not susceptible to the fluctuations of other unlisted funds, and also available to investors with a minimum investment of just $25,000. A recent article in the Australian Financial Review highlighted how unlisted property funds have continued their spectacular run of returns in the past 5 years, once again outperforming listed real estate trusts, direct property investments and the broader equities market – delivering a return of 13.8% throughout calendar year 2018. Top performing unlisted property funds aimed at retail investors have returned 22% during the past 5 years, nearly 11 times what savers have earnt from basic savings accounts. “Performance for the past five years has been fantastic,” says Dugald Higgins, head of property and listed strategies at Zenith Investment Partners, an independent research group. Over the same 2018 period, direct property gave back a total return of 10.3%, according to a quarterly report produced by Zenith Investment Partners, MSCI, the Property Funds Association and the Property Council of Australia.
Australian equities closed the 2018 year on a weaker note at negative 2.8%, while the Australian real estate investment trusts provided a modest 2.7% return. For comparison, cash remained stable at 2% and fixed-income returns held strong at 6.8%. Over the past five years, unlisted property has delivered long-term value for investors, with total returns at 22% annually, more than three times stronger than Australian equities at 5.6%. In 2016, CFMG Capital launched the CFMG Land & Opportunity Fund, an unlisted property fund paying fixed returns of 12% per annum (net of fees). The fund has operated seven land sub-division projects in that period valued in excess of $250 million. To consider further investment with CFMG Capital via the CFMG Land & Opportunity Fund or to discuss the options available to you as an existing investor in the CFMG Capital Preference Shares to roll over your current investment into the CFMG Land & Opportunity Fund contact us on (07) 3613 0001 or investorrelations@cfmgcapital.com.au and request your copy of the Product Disclosure Statement and any Supplementary Product Disclosure Statement.
New Investment Opportunities CFMG Capital are continuing to demonstrate the strength of our project delivery capabilities with both the Creeks Edge and Oakland Pocket projects having been successfully completed earlier than the forecast minimum term and many of the satisfied investors now rolling over into the latest investment opportunities.
Koplick Road at Park Ridge
The anticipated rollover of funds has been significant as investors continue to show their loyalty to the investment options provided via the CFMG Land & Opportunity Fund. This loyalty is rewarded with consistent exclusive priority access given to existing investors for new opportunities prior to public release, with one recent client investing in Middleton Park II pointing out to the investor relations team that it was in fact the 10th project they had invested in, a great milestone for both parties.
Located 28 kilometres south of the Brisbane CBD, the project is intended to provide a range of new housing opportunities.
Middleton Park II at Logan Reserve CFMG Capital recently launched the newest opportunity via the CFMG Land & Opportunity Fund with the release of Middleton Park II to the market. Like all projects within the highly successful unlisted fund, Middleton Park II offers a fixed return of 12% per annum over a fixed term, however the investment opportunity does have some unique features that have made it the most popular investment offering CFMG Capital have released through the fund. Middleton Park II, as the name suggests, is the extension of an existing CFMG Capital residential development delivered by the fund and thus enjoys the benefits of being a proven and operational project. The site lies immediately adjacent to the existing 150 lot Middleton Park development and will create an additional 186 allotments to form a 336 lot residential community. The benefits of being a proven project are simple, and investors have certainly taken note. There is an established project and brand in the market, construction of existing stages is complete, there is a sales office in place and none of the traditional preliminary project work or costs are required as a result. This places Middleton Park II as a particularly attractive offer to the CFMG Capital investor base.
Existing Middleton Park Development
Koplick Road in Park Ridge is set to become CFMG Capitals latest residential community and is expected to be released to our VIP waiting list during the second quarter of calendar year 2019.
The project site has the benefits of having an existing development approval in place and will be developed by CFMG Capital into an 89 lot residential community. Acacia Village at Wollert A key to CFMG Capitals success is working to a clearly defined strategy which enables the long term vision to be achieved in securing a suitably weighted forward project pipeline. Part of this strategy is to recognise the importance of national diversification and to achieve a balanced project portfolio and the project opportunity identified in Epping Road at Wollert is expected to align with these strategic goals. Located only 25km from the Melbourne CBD, Acacia Village at Wollert will be developed among an abundance of already established lifestyle amenities, health and education facilities, outdoor living, and public transport and major road networks. It is anticipated that the project site will be developed as an 84 lot residential development together with associated retail and commercial uses, and is situated in close proximity to nearby developments being undertaken by other major developers including AV Jennings and Villawood. Acacia Village at Wollert is expected to be released to our VIP waiting list during the third quarter of calendar year 2019.
Middleton Park II
Chambers Flat Road
School Road
STAGE 1
115
116
117
118
119
STAGE 2
124
123
210
209
STAGE 3
211 212 213 306 307 308
309 310
EMPLOYMENT SUPERLOT
311 312
120
125
121
126
207
215
304
112
122
127
206
216
303
324 323
313 314 315
322
EPPING ROAD
LANDOVER ROAD
305
113
114
208
214
316 317
111
110
109 108 107
101
102 103
104
128
203 204
205
202
221
201
222
105 106
217
218
301
302
321
320
319
318
326 220
219
334 333 332 331 330 329 328 327 325
Gardener Road at Rochedale Gardner Road in Rochedale is expected to strengthen CFMG Capital’s forward trading performance being located in the prestigious suburb of Rochedale, just 12 kilometres from the Brisbane CBD. The project will service the significant demand for vacant residential land located within the inner ring suburbs conveniently located to the city centre. Gardener Road at Rochedale is expected to be released to our VIP waiting list during the third quarter of calendar year 2019.
Communities Update CFMG Capital’s development pipeline is diversified across the
Project EasternOverview Seaboard States having 1,200 lots under development or
completed and a further 1,000 lots going through the planning and assessment process.
COMING SOON CURRENT COMPLETED
A key to CFMG Capital’s success is working to a clearly defined strategy which enables the long term vision to be achieved in securing a suitably weighted forwards project pipleline. In implementing this strategy, CFMG Capital adopts a three tiered selection criteria. Firstly, consideration is given to the appropriate market or State’s within Australia to promote investment opportunities. Secondly, areas or suburbs within each State are analysed having regard to their potential growth needs.
CREEKS EDGE OAKLAND POCKET LOMANDRA PARK SOLANDER MIDDLETON PARK MIDDLETON PARK II HARRIES ROAD KOPLICK ROAD
350
336 303
300
GARDENER ROAD
200
THE BROOK
150
DAMARA
100
THE MILLSTONE BROOKHAVEN/ALTITUDE EVERGREEN
100
0
89
84
76
57
15
Ed g
ACACIA VILLAGE
80
50
ks
DAMARA PARK MELBOURNE
179
e El ev at e cia Vi Ga l l ag rd e en er Ro Ko ad pl ick Lo m Roa an d dr M aP id ar dl k e Oa ton kl an Park d Po ck So et l Th and e er M ills to ne
ELEVATE
250
Ac a
CUNNINGHAM RISE
SYDNEY
With the benefit of a diversified project portfolio CFMG Capitals current development pipeline across ten different projects is summarised in the following table: Project Lot Status
Cr ee
BRISBANE GOLD COAST
And thirdly, particular properties identified within those areas or suburbs in each State are assessed against CFMG Capitals key investment criteria.
Solander at Park Ridge
Lomandra Park at Bridgeman Downs
The development works for the 103 allotments in stages 1 and 2 of the project are completed with the final stage 3 construction works having commenced.
The project team at CFMG Capital have commenced the initial development works with demolition of the existing houses and clearing of the project sites having commenced.
Our Solander community is a hive of activity with the stage one homes completed and the majority of the stage 2 homes now under construction.
Given the premium inner ring location of Lomandra Park, located just 12km from the Brisbane CBD – there will be significant demand from local owner occupiers, particularly 2nd/3rd home buyers and upgraders.
Residents are progressively taking up possession and commencing their lives in the Solander community. The Millstone at Strathtulloh The CFMG Capital management team are continuing to drive construction momentum with the construction now underway simultaneously on 238 allotments across stages 1, 2, 3, 4, 5 and 7a of the project. Sales progress at The Millstone remains positive with 245 allotments pre-sold on an unconditional basis and the remaining 58 allotments continuing to be sold down.
As a result, the key sales strategy for CFMG Capital will be to provide targeted land allocations to premium volume builders with pent up demand for inner city vacant land greater than the typical inner ring land sizes of 300-400m2. With the changes to the Development Approval achieved by the team at CFMG Capital the sales team for Lomandra Park are excited to be bringing to market a project that specifically meets a gap in the market for larger allotments in the inner ring.
Middleton Park at Logan Reserve
Whilst the previously proposed plan included a minimum lot size of 450m2, the revised plan driving the average lot size up well over 500m2 has been extremely well received by agents, builders and interested local parties alike.
CFMG Capital has achieved title registration on the 75 lot stage 1 which has triggered the initial settlement of allotment sales.
Elevate at Ormeau Hills
Settlement of the sale of 35 lots was completed during March 2019 – generating in excess of $7m in revenue. The construction works for stage 2 of the project have commenced (comprising a further 75 allotments) which is establishing a solid benchmark for the ongoing success of the larger 336 lot Logan Reserve community.
The team at CFMG Capital have completed the initial site clearing in preparation for commencement of the bulk earthworks. With an updated development approval now granted by the Gold Coast City Council (to increase the project yield by four allotments) the management team are preparing to proceed into the next phase of the construction works. Colliers International are the appointed on-site agents, while CFMG Capital will also leverage our own traditional builder networks to establish sales volume and momentum. Colliers have recently completed the sales process for a local development, while CFMG Capital also completed a 255 residential subdivision just 18 months ago less than 1km from the site, and as such existing networks and market momentum should be established as we proceed into the construction phase.
Oakland Pocket at Morayfield Titles registration was achieved during February 2019 paving the way for the settlement of allotment sales to commence. As the project transitioned to sell down, CFMG Capital commenced early distribution to investors in the project via the CFMG Land & Opportunity Fund with many of those investors electing to roll over into the latest investment opportunities. Creeks Edge at Morayfield With construction works complete, title registration achieved and settlement of lot sales having progressed CFMG Capital was able to bring forward the minimum term for the investment via the CFMG Land & Opportunity Fund to twelve months – being 6 months earlier than the forecast minimum term of 18 months. Based on the success with this investment opportunity, a significant proportion of CFMG Capitals loyal investors have elected to re-invest into one of our latest investment opportunities.
Market Update One of the keys to CFMG Capital’s continued success is maintaining a clearly defined acquisitions strategy and to adopt CFMG Capital’s three-tiered project selection criteria. This selection criteria allows us to continue to capitalise on the ongoing price gap in South East Queensland (SEQ) when compared to both the New South Wales and Victoria residential property markets. New data recently released by The Australian Bureau of Statistics (ABS) shows more than 11,490 people moved from NSW to QLD in the 3 months to September 2018, following another 12,802 in the three previous months. Between 7,000 and 8,000 people also made the move from NSW to VIC. This continued interstate movement of the Australian population underpins the continued growth and demand for property within South East Queensland, while also highlighting the continued struggles the Sydney property is experiencing. New data released by CoreLogic, shows how difficult it is to save enough money to purchase a property in both Melbourne or Sydney, with Sydney being particularly difficult. Figures based on a weekly deposit of $400 show that it would take 5 years and 9 months to save up the $128,034 needed to secure a property at the city’s median purchase price. While in Brisbane it would only take 3 years and 1 month to save up the $66,770 needed to afford the deposit needed to secure a median priced dwelling. As of March, median dwelling prices across Australia’s three main capital cities are:
• Sydney: $833,876 • Melbourne: $665,044 • Brisbane: $491,925. Both market performance and average sale prices across Australia’s 3 largest capital cities highlight the continued positive market conditions of South East Queensland in comparison to both the Sydney and Melbourne markets. The Key characteristics CFMG Capital consider when identifying suitable projects include: • Proximity to a capital city; • Population growth and demographics of the locality; • Transport options; • Employment opportunities; and • Lifestyle choices including schools, family security, transportation and recreation.
CEO Sleepout On Thursday 20 June 2019, for the second year running, CFMG Capital’s Managing Director Scott Watson will be participating in the Vinnies CEO Sleepout and experiencing just a small portion of what it can be like to be homeless — a reality experienced every night by more than 116,000 Australians. Last year, with your support, CFMG Capital raised $17,347.80 to provide vital support services to those experiencing homelessness. This year we have set an ambitious fundraising target of $25,000. CFMG Capital are committed to increasing awareness about homelessness in Australia, as well as raising much needed funds to provide those experiencing homelessness with essential services and support. You can view Scott Watson’s profile at ceosleepout.org.au/fundraisers/scott-watson/brisbane
PO Box 663 Level 2, 117 McLachlan St Fortitude Valley QLD 4006
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