CFMG Capital Year in Review 2022

Year in Review

Real people.

Dear Investor,

The pandemic lockdowns of 2020 and 2021 have provided Australians with the time and means to consider their financial security and future, driving an unprecedented increase in market participation and a growing awareness of the companies and products making up the investable landscape.

Here at CFMG Capital we are proud to be part of the investable landscape and in doing so are proud of our track record and history of delivering attractive returns to our investors and our experience and history which since inception has enabled us to return 100% of the capital invested to all of our loyal investors.

During financial year 2022 CFMG Capital successfully completed 9 investment opportunities on behalf of investors in investment products via both the CFMG Land and Opportunity Fund and CFMG First Mortgage and Income Fund returning over $21M in invested capital and returns to those investors.

The key to CFMG Capital’s 100% success rate has been working to a clearly defined strategy which enables our long term vision to be achieved and in turn for us to continue to deliver value to our investors through disciplined acquisition and a conservative but realistic approach to investment.

The early ‘post pandemic’ period has been characterised by a heightening of inflationary fears and increasing volatility, resulting in some pull back within some market segments (particularly share market growth stocks) and further volatility and uncertainty with a change in Government domestically and the spectre of conflict in Ukraine.

Throughout this period Australian property has continued to emerge as a popular option for investors (seeking either growth or income or both).

CFMG Capital’s two alternatives to investing in property without directly buying housing via the CFMG Land and Opportunity Fund or CFMG First Mortgage and Income Fund has seen positive capital inflow with over $35M in new capital invested during financial year 2022.

This positive capital inflow has been seen from investors seeking to earn property-based income without direct property ownership because for some investors direct property investment can be intricate and very involved.

CFMG Capital’s property funds are operated via a special purpose vehicle, with investors sharing in profits from either raw development, capital improvements, planning application or basic property growth.

These unlisted property trusts, with stable risk managed returns have also been shown to be very popular during periods of volatility and uncertainty.

A focus for CFMG Capital during the past twelve months has been on expanding our investment offers with regular income, professional management, diversification and opportunity for growth.

In accordance with our strategic plan CFMG Capital have undertaken the following key activities:

• Completed the sale of 426 residential lots with a gross realisation of $142M

• Completed the acquisition of our new project sites at Arbourwood Morayfield, Pumicestone Pocket Caboolture and Sovereign Estates Rochedale Queensland

• Delivered over 120 meals within the immediate community via our involvement in the local Meals on Wheels program

• Provided in excess of $75,000 in charitable donations and/or sponsorship to local community sporting clubs and groups, including our 5th year supporting and fundraising for the Vinnies CEO Sleepout

• Expanded the Bellmere project site holdings to circa 730 residential lots via the strategic acquisition of 4 adjoining 69 hectare sites to bring the total gross realisation beyond $250M

• Opened the display home for Sunday Living Homes at the Middleton Park residential community

In the following pages of this report, you will find some very useful and general information about our business, an overview of some new products, our projects and some market commentary. In addition, we supply a sneak preview to some of the upcoming opportunities set for FY 22/23.

As always, if you require anything from our team –please do not hesitate to get in touch.

Thank you for your ongoing support and we look forward to continuing to deliver on our commitments to you our loyal investors and to building a long term and repeat relationship.

Regards, Scott Watson Managing Director, CFMG Capital

CFMG First Mortgage and Income Fund

The CFMG First Mortgage and Income Fund continues to grow from strength to strength after it was launched in 2021. Almost $8M was raised throughout the financial year off the back of eight CFMG First Mortgage and Income Fund offers being released for investment.

The successful redemption of five of these investment offers totalling $3.4M were also made throughout the financial year.

returns 5.95% - 7.85% p.a

investing with $25,000

First Mortgage

benefits of the

Income

paid quarterly

CFMG Land & Opportunity Fund

The CFMG Land & Opportunity Fund is an unlisted managed investment scheme that invests in the development of residential land subdivision projects that meet the very specific CFMG Capital investment criteria.

Interest in the CFMG Land & Opportunity Fund continues to grow with 4 new investment opportunities launched throughout the financial year. This resulted in a total raise of over $23M and over $18M was redeemed to investors across 4 completed projects throughout the year.

Targeted returns 8.95% - 11.95% p.a

Start investing with $25,000

Key features of the CFMG Land & Opportunity Fund include:

Capital + interest paid at end of term

12 - 24 month terms

National Market Update

Residential property prices across Australia have continued to rise over the past twelve months, with CoreLogic’s most recent ‘Monthly Housing Charts’ for August showing dwelling values across Australia have risen by 8% over the past year. All eight major capital cities across Australia have seen dwelling values increase across the past twelve months, with the biggest jump in property prices seen in Brisbane at 22.1% and Adelaide at 24.1%. The main factors fuelling this continued growth in property prices include relatively low interest rates when compared to the long term average despite the recent rises, and government income support.

Over the past three months dwelling values have begun to cool across most major cities, with only Darwin, Perth, Adelaide and Brisbane continuing to see an increase in property prices this past quarter. Across Australia we have seen dwelling values cool by 2%, with this largely seen as the market correcting itself after a period of unsustained growth, particularly in both Melbourne and Sydney. CFMG Capital have largely avoided any impacts from this slight correction in property prices, with South East Queensland, where CFMG Capital have 95% of its forward pipeline, continuing to see increasing dwelling values over the past quarter.

CFMG Capital, much like the wider property market over the past year, have seen a steady increase of residential lot prices, as the group continues to review pricing every quarter throughout each of the group’s active projects along the east coast of Australia.

SEQ Market Update

As previously mentioned, Queensland’s property market has continued its unprecedented increase in dwelling values, with Brisbane property prices increasing by 22.1% over the past twelve months and remaining steady over the past quarter when increasing by 0.1%. The key factors driving this growth include the state’s declining unemployment rate, which is currently down to as low as 4% and the increased rate of interstate migration driving QLD’s population growth.

South East Queensland’s land market has seen a particular increase in property prices and sales volumes, with this being driven by increased local demand and more stock coming to market. Lot availability, however, continues to be the main driver of sales volumes, with the Logan, Moreton Bay and Ipswich markets dominating the market share for sales. At the end of the June 2022 quarter most South East Queensland growth corridors had less than 100 lots, with only Ipswich having more than 100 lots across the region available for sale.

According to Oliver Hume’s ‘Quarterly Market Insights Report’, the June 22 quarter saw median land prices reach a record high, with prices increasing by 4.6% over the quarter and 32% over the past twelve months. Logan experienced an increase of 10% over the past year, with Moreton Bay increasing by 40%, Ipswich increasing by 41.1% and Brisbane increasing by 107.7%. However, these extremely high growth rates are expected to steady over the next few months, with rising interest rates now starting to flow through the market.

Melbourne Market Update

Victoria’s residential property market has seen its dwelling values remain relatively steady over the past twelve months, with Melbourne property prices increasing by 0.3% as of August 2022. Although property prices in Victoria haven’t seen the extreme growth other markets have seen, the Victorian economy remains one of the better performing economies across the country. The key factors driving this include the state’s low unemployment rate, which is currently down to 3.2%, robust retail trade, participation rates and levels of construction work.

Although the overall property market in Victoria has recently slowed, the land market in Victoria has continued to perform well, with sales volumes and median lot prices continuing to rise. Median lot prices across metropolitan Melbourne reached a high of $379,000 as of June 22 quarter, with the median price being 3.6% higher for the quarter and 17% higher of the past twelve months.

CFMG Capital by the numbers 2022

100%

of capital invested has been returned to our loyal investors

$35M in new capital invested during last financial year

9 $21M

investment opportunities completed across the First Mortgage & Income Fund and the Land & Opportunity Fund

426

residential lots sold, totaling a gross realisation of $142M 730

of invested capital was returned to investors

donated to charities, local sporting clubs and groups

total residential lots now make up the future Bellmere project

120

meals delivered through the local Meals on Wheels program

new development sites acquired in Morayfield, Caboolture and Rochedale

4new staff members welcomed to the CFMG Capital team

CFMG

Acquisitions Strategy

The key focus for CFMG Capital remains to acquire strategic residential development sites that meet a strict investment criteria and enable us to provide attractive investment opportunities to our loyal client base, in addition to generating an attractive return for CFMG Capital.

In order to achieve this, a steady flow of new acquisitions is required, with the primary challenge being to ensure they meet the clearly defined investment criteria underpinning the CFMG Capital development business. This criteria is defined generally below:

• Proximity to a major capital city;

• Population growth and demographics of the locality;

• Proximity to existing and proposed competing land estates (particularly master planned estates);

• Proximity to key planned infrastructure projects;

• Employment opportunities within the locality;

• Lifestyle choices including schools, family security, transportation and recreation;

• A forecast 20% development margin (before payment of fund management fees); and

• An independent valuation equal to, or less than the purchase price.

In the assessment of potential projects CFMG Capital targets short, medium and long-term opportunities with the view to fill the groups development pipeline from both ends.

Throughout the past year, CFMG Capital have taken a more considered approach to site identification and acquisition, with a strong focus towards opportunities within the strong performing South East Queensland market. Particular attention has been to targeting opportunities located within the Moreton Bay and Logan growth corridors, while also focusing on sites adjacent to, or in the immediate vicinity of existing CFMG Capital communities.

By purchasing adjacent to, or in the immediate vicinity of existing projects – CFMG Capital are able to expand existing projects taking advantage of existing marketing, development and sales momentum, or in some cases replace completed projects to meet the demands of various sales networks.

Whilst it is important for CFMG Capital to acquire short and medium-term projects, that can be released into the market over the next couple of years, it is also critical for CFMG Capital to look further into the future and acquire sites on longer-term agreements. This is key for CFMG Capital to future proof the group’s stock supply.

These Long-term acquisitions also provide CFMG Capital the opportunity to build future value across these projects by obtaining Development Approvals and/or rezoning, while also allowing CFMG Capital to benefit off the continued growth in residential land values.

During the past twelve months CFMG Capital have managed to acquire short, medium and long term development sites, across over 16 separate transactions totalling approximately 1600 residential lots. A snapshot of the Group’s existing development pipeline is shown as follows:

CFMG Capital Project Pipeline

Pumicestone Pocket, Caboolture QLD

60 lots

Launch: Early 2022

Farriers Creek, Burpengary QLD

115 lots

Launch: Early 2022

Arbourwood, Morayfield QLD

220 lots

Launch: Mid 2022

Birchwood, Park Ridge QLD

240 lots

Launch:   Late 2022

Bellmere QLD

730 lots

Launch: 2024

Pimpama QLD

300 lots

Launch: 2025

Sunbury VIC

150 lots

Launch: 2027

Creating real neighbourhoods

CFMG Residential Communities Update

CFMG Residential Communities continues to build the portfolio of neighbourhoods across the east coast of Australia. The focus for the team has been around the suburbs north of Brisbane with 3 brand new communities launched this year.

Farriers Creek in Burpengary

Farriers Creek was launched to the market in April 2022 and is located in Burpengary. Offering a more premium offering compared to our other communities in the region, Farriers Creek is located along an existing creek line.

Set amongst nature, Farriers Creek is an ideal place for families to grow. Whether it’s a family game of backyard cricket, exploring the nearby creek or catching up with neighbours while the kids ride their bikes, Farriers Creek is a place where residents can slow down and enjoy life.

Pumicestone Pocket at Caboolture

Pumicestone Pocket is a residential community located in Caboolture, north of Brisbane. The community was launched to market in January 2022 and only a few lots remain available for sale.

With low maintenance living in mind, Pumicestone Pocket is a place where residents can spend more time out and about enjoying life. Whether it’s a day on the water at Pumicestone Passage, a hike through the hinterland or simply enjoying a night out with friends at their local, Pumicestone Pocket makes life easy.

Arbourwood in Morayfield

Arbourwood in Morayfield is the latest community to be launched by CFMG Residential Communities within the north Brisbane region. Interest in the new community has been strong so far with contracts already being signed on the lots released in the first stage.

Residents can live close to nature with a beautiful park within the community at Arbourwood. There’s also easy access to a range of shops, schools and transport options within the surrounding suburb.

Choose. Build. Live

Sunday Living Homes has gathered momentum since its launch last year with strong sales and home constructions underway across a range of CFMG Residential Communities.

EASY, LIVE FULLY. BUILD EASY, LIVE FULLY. BUILD EASY, LIVE FULLY. BUILD EASY, LIVE

Customer feedback throughout the year resulted in an evolution of the Sunday Living Homes floorplans. An additional multipurpose room was added to the floorplans to cater to our customers needs for more living spaces, because we understand that it’s not the house you live in, it’s the home you create.

FULLY. BUILD EASY, LIVE FULLY. BUILD EASY, LIVE FULLY. BUILD EASY, LIVE FULLY. BUILD EASY,

A display home for Sunday Living Homes opened in late 2022 and showcases the popular Thomson house design. The display is located within Middleton Park in Logan Reserve where a number of Sunday Living Homes are already under construction.

An additional display will be completed north of Brisbane in our new Arbourwood community in Morayfield. This display will showcase a Sunday Living Homes bathroom and kitchen fit out and is expected to open in late 2022.

CFMG Capital Philanthropy

CFMG Capital prides itself on making a contribution to the local community and 2022 has continued this mission with another year of Meals on Wheels deliveries PLUS a record amount raised for the annual Vinnies CEO sleepout.

CFMG Capital has also sponsored and supported a range of local groups, businesses and charities throughout the year. To find out more visit cfmgcapital.com.au/philanthropy to find out more.

Vinnies CEO Sleepout

Scott Watson and Andrew Thomson took part in their 5th year supporting the 2022 Vinnies CEO sleepout and raised a record $37,000 at a fundraiser event. All money raised goes to changing the lives of Australians experiencing homelessness.

Each month 2 members of the CFMG Capital team hit the streets to deliver much needed Meals on Wheels to local residents. Over 120 meals were delivered by the team this year.

Meals on Wheels