PrivateInvest Select Mortgage Trust No 2

Asquith, NSW | Residential Construction Finance.

First Mortgage Facility Target Return - 10.75%, post fees and expenses.

For personal use only by wholesale and professional Investors.

PrivateInvest Pty Limited

ACN 626 703 026

Authorised Representative Number 001284225

Perth Office 561 Stirling Highway Cottesloe, Western Australia, 6011

Sydney Office 2 Short Street, Double Bay, New South Wales 2028

Postal PO Box 477, Cottesloe, Perth Western Australia 6911

Phone 1300 2 INVEST (1300 2 468 378)

Email corporate@privateinvest.com.au

Web www.privateinvest.com.au

Trustee

PrivateInvest Capital Securities Limited

ACN 6 11 892 249

Australian Financial Services Licence No 491287

Perth Office 561 Stirling Highway Cottesloe, Western Australia, 6011

Sydney Office 2 Short Street, Double Bay, New South Wales 2028

Postal PO Box 477, Cottesloe, Perth Western Australia 6911

Phone 1300 2 INVEST (1300 2 468 378)

Email corporate@privateinvest.com.au

Investment Manager

PrivateInvest First Management Pty Limited

ACN 625 468 215

Perth Office 561 Stirling Highway Cottesloe, Western Australia, 6011

Sydney Office 2 Short Street, Double Bay, New South Wales 2028

Postal PO Box 477, Cottesloe, Perth Western Australia 6911

Phone 1300 2 INVEST (1300 2 468 378) 1300 4 FUNDING (1300 4 386 346)

Registry Services

Automic Group Pty Ltd

Office Level 5, 126 Phillip Street

Sydney NSW 2000

Phone 1300 288 664

Email hello@automicgroup.com.au

Corporate Trusts Management Legal Advisors

McMahon Clarke

Office Level 7/100 Creek Street, Brisbane QLD 4000

Phone + 61 7 3239 2900

Accounting and Taxation Accountants

Pitcher Partners

Office Level 11/12-14 The Esplanade, Perth WA 6000

Phone (08) 9322 2022

Important Notice and Disclaimer

This Loan Information Memorandum is dated 28 March 2023 (“the Issue Date”) and is issued by PrivateInvest Capital Securities Limited ACN 611 892 249 (“the Trustee”, “us” or “we”), being the trustee of PrivateInvest Select Mortgage Trust No 2 ABN 55 483 320 231 (“Trust”). This Loan Information Memorandum sets out information about the Trust upon which the recipient of this Loan Information Memorandum (“the Recipient”, “you”) may base a decision as to whether it should investigate a possible investment in the Trust.

The Trustee has appointed PrivateInvest First Management Pty Limited ACN 625 468 215 (“the Investment and Facility Manager”) to act as the investment and facility manager of the Trust.

This Trust is a “wholesale trust” and is not a registered managed investment scheme under the Corporations Act. This Loan Information Memorandum is supplied personally to the Recipient on the following conditions, which are expressly accepted and agreed to by the Recipient, in part consideration of the supply of this Loan Information Memorandum, as evidenced by the Recipient’s retention of this Loan Information Memorandum. If these conditions are not acceptable, then this Loan Information Memorandum is to be returned to the Trustee immediately.

1. No offer to subscribe for an interest in the Trust is made pursuant to this Loan Information Memorandum where the offer would need a regulated disclosure document under Division 2 of Part 7.9 of the Corporations Act. This Loan Information Memorandum is neither a prospectus nor a product disclosure statement regulated under the Corporations Act, nor is it required to be. A copy is not required to be, and has not been, lodged with the Australian Securities and Investments Commission (“ASIC”).

2. This Loan Information Memorandum has been prepared only for the issue to, and use by, prospective Investors who qualify as “Eligible Investors”. An Investor qualifies as an Eligible Investor if they are a “wholesale client” (as defined in section 761G of the Corporations Act) or a person who satisfies the Trustee that they are not a “retail client” within the meaning of the Corporations Act and who otherwise satisfies the Trustee’s investment criteria.

3. This information does not constitute and should not be construed as an offer, invitation, proposal, or recommendation to apply for Units by persons who are not Eligible Investors. Applications or any requests for information from persons who are not Eligible Investors will not be accepted.

4. This Loan Information Memorandum does not purport to contain all the information that may be required to evaluate an investment in the Trust (or would be required if it were a disclosure document regulated under

the Corporations Act). The Recipient and respective advisers should conduct their own independent review, investigation, and analysis of the Trust and of the information contained, or referred to, in this document, before making a decision to invest in the Trust.

5. None of the Trustee, Investment and Facility Manager, nor the tax or legal advisors named in the Directory, nor their directors, officers, employees, agents, advisers or representatives (referred to collectively as “the Beneficiaries”) makes any representation or warranty, express or implied, as to the accuracy, reliability or completeness of the information contained in this Loan Information Memorandum or previously or subsequently provided to the Recipient by any of the Beneficiaries. This includes, without limitation, any historical financial information, forward looking statements, estimates and projections and any other financial information derived therefrom. Nothing contained in this Loan Information Memorandum is, or shall be, relied upon by the Recipient or any other person, as a promise or representation, whether as to the past or the future.

6. None of the advisors (“Advisors”) named in this Loan Information Memorandum has made any statement that is included in this Loan Information Memorandum or any statement on which this Loan Information Memorandum is based. Each of the Advisors:

a. Has not authorised or caused the issue of this Loan Information Memorandum, and makes no representation or warranty, express or implied, as to the fairness, accuracy or completeness of the information contained in this Loan Information Memorandum; and

b. To the maximum extent permitted by law, expressly disclaims and takes no responsibility for any statements in or omissions from this Loan Information Memorandum.

7. Except insofar as liability under any law cannot be excluded, the Beneficiaries shall have no responsibility arising in respect of the information contained in this Loan Information Memorandum or in any other way for errors or omissions (including responsibility to any persons by reason of negligence). The Beneficiaries do not warrant nor represent the accuracy, completeness or currency of, or accept any responsibility for errors or omissions in, any information contained in or omitted from this Loan Information Memorandum (whether oral or written), and disclaim and exclude all liability (to the maximum extent permitted by law) for all losses

and claims arising anywhere out of, or in connection with, any information contained in or omitted from this Loan Information Memorandum (whether oral or written), including by reason of reliance by any person on such information. None of the Beneficiaries take responsibility for any information, statement or representation contained in this Loan Information Memorandum nor any omission from it.

8. Except in certain circumstances (including fraud, negligence or default by the Trustee), the Trustee enters into transactions for the Trust in its capacity as trustee of the Trust only, not in its own capacity, and its liability in relation to those transactions is limited to the relevant assets of the Trust.

9. This Loan Information Memorandum has been prepared as at the Issue Date, and its delivery at any time after the Issue Date does not imply that the information contained in it is accurate, timely or complete at any time subsequent to the Issue Date. The Trustee may in its absolute discretion, but without being under any obligation to do so, update or supplement this Loan Information Memorandum. Any further information will be provided subject to these terms and conditions.

10. The Trustee has not authorised any person to give any information or to make any representation or provide information in connection with the Trust nor any offer that is not contained in this Loan Information Memorandum. Any such information or representation not contained in this document must not be relied upon as having been authorised by or on behalf of the Trustee.

11. The Trustee reserves the right to evaluate any applications for investment in the Trust and is entitled to await receipt of cleared Trusts before deciding to reject any or all applications submitted. The Trustee is not obliged to give reasons for rejecting any application made. The Beneficiaries shall not be liable to compensate the Recipient or any applicant for Units (“Applicant”), for any costs or expenses incurred in reviewing investigating or analysing any information in relation to the Trust, in making an application or otherwise.

12. The Trustee reserves the right to charge an Applicant a dishonour fee (not exceeding the dishonour fee charged to the Trustee) in the event that a cheque on an application is void.

13. The information in this Loan Information Memorandum is provided personally to the Recipient as a matter of interest only. It does not amount to a recommendation either expressly or by implication with respect to any investment in the Trust. This Loan Information Memorandum does not constitute tax or investment advice and does not consider any personal objectives, circumstances, or financial needs of any Investor. Potential Applicants should obtain their own financial advice when considering an investment in the Trust.

14. The content of this Loan Information Memorandum is:

a. Has not authorised or caused the issue of this Loan Information Memorandum, and makes no representation or warranty, express or implied, as to the fairness, accuracy or completeness of the information contained in this Loan Information Memorandum; and

b. Not to be disclosed by a Recipient to any other person or entity, whether an associate or related body corporate of the Recipient, other than an employee or professional adviser to the Recipient and then only for the sole purpose of the Recipient considering and taking advice as to whether it will apply for Units; and

c. Not to be reproduced, either in whole or in any part or parts, without the Trustee’s prior written consent and, if such written consent is given, only for the purposes referred to above.

15. The Offer of Units contained in this Loan Information Memorandum is available to Eligible Investors receiving the Loan Information Memorandum in Australia. This Loan Information Memorandum does not constitute an offer in any place outside of Australia where, or to any person to whom, it would be unlawful to make such an offer. The distribution of the Loan Information Memorandum in jurisdictions outside Australia may be restricted by law and persons who come into possession of the Loan Information Memorandum should seek advice on and observe any such restrictions. Any failure to comply with such restrictions may constitute a violation of applicable securities law.

16. Certain capitalised words and expressions used in this Loan Information Memorandum are defined in the Glossary. All references to dollar amount in this Loan Information Memorandum are to Australian Dollars (“AUD”) and are exclusive of GST, unless otherwise stated.

17. The Trustee is not authorised under the Banking Act 1959 (Cth) and is not supervised by the Australian Prudential Regulation Authority, nor are the investments offered by the Trustee covered by the deposit or protection provision in Section 13A of the Banking Act.

18. All images contained in this Loan Memorandum reflect architect impressions via computer generated images (“CGIs”). Unless otherwise stated, no reliance should be made on the accuracy of these images.

Executive Summary

Executive Summary

PrivateInvest Capital Securities Limited is pleased to offer wholesale and professional investors the opportunity to invest in a first mortgage construction loan located in Asquith, New South Wales. This Loan Information Memorandum is dated 28 March 2023 (“the Issue Date”) and is issued by PrivateInvest Capital Securities Limited (“PrivateInvest”) ACN 611 892 249 and relates to an investment offer of Units in PrivateInvest Select Mortgage Trust No 2 (“Units”). This Loan Information Memorandum outlines in more detail the key Investment Summary that potential investors should read in full.

■ The purpose of the structured Loan is to facilitate the construction of fourteen townhouses (“Proposed Development”) in a desirable Greater Sydney location (Asquith) that has strong fundamentals for demand.

■ PrivateInvest provided a First Mortgage site finance facility in November 2022 (PrivateInvest Select Mortgage Trust No 1) for the Borrower to complete the necessary preliminaries to begin construction.

■ The Borrower’s current facility (PrivateInvest Select Mortgage Trust No 1) has had no impairments and is set to be refinanced two months ahead of its expiry, demonstrating their commitment to the Proposed Development.

■ PrivateInvest has undertaken due diligence on the Proposed Development since October 2022 and has since reached credit approval on 20 March 2023.

■ The Loan will be progressively drawn over the 18-month term (initial forecast drawdown of $3,300,000) with $1,650,000 in equity to be contributed by the Borrower and a tranche of construction debt funding is expected to commence September 2023.

■ An appropriately priced townhouse product that has been paired at the lower end of the comparable valuation analysis range providing strong price and value appeal to both owner occupiers and investors.

■ The Valuation completed by Ray White Valuations on 18 February 2023, provided a Market Value ‘As Is’ of $4,675,000 (ex GST) and a Market Value ‘As If Complete’ of $16,950,000 (ex GST).

■ 64.90% loan to value ratio (peak debt) against the ‘As If Complete’ Market Valuation (ex GST).

■ The Borrower is motivated to achieve their pre-sale requirement as they have provided additional security across two properties (“Additional Secured Properties”) in addition to paying a higher interest rate until such requirements are met.

■ A MCG Quantity Surveyors Report agrees with the cost check estimate and the construction program.

■ The Borrower (Cuda Homes Pty Ltd) has three directors (who are all Individual Guarantors) with one of these being Colin Billyard who owns his own building company CJ Billyard Builders, providing comparable developments and development management experience. CJ Billyard Builders will complete construction.

■ A Project and Sales Marketing Proposal from local real estate agent Sciberras Group that will be utilised to promote an ‘off the plan’ sales campaign for the Proposed Development.

■ Residential development site with no evident environmental/heritage issues, with construction expected to begin in early April 2023.

■ Asquith has experienced an 83.53% population increase from 2016-2021 (2016 and 2021 Census Data).

■ There is evidence of adequate demand for three and four bedroom dwellings in Asquith in addition to rental vacancy rates below the Sydney average.

■ The target return for the investment is 10.75%per annum, post fees and expenses.

■ The Loan has a minimum term of 16 months (meaning if the Borrower settles earlier, they must pay the interest outstanding to the 16 Months) and the maximum term is 18 months.

■ The Interest Rate to the Borrower is capitalised and all unpaid interest will be paid by the Borrower on completion of the project. This means that the Investors 10.75% per annum target return, post fees and expenses will be paid at the completion of the Loan Term, allowing time for external accounting and taxation verification for investors distribution and wind-up of the Trust.

■ The minimum subscription is $100,000 and an Application Form can be provided on request.

■ The closing date for the offer is 30 April 2023, and the Trustee holds the right to close the offer earlier as it is expected to be over subscribed.

We welcome your interest, and potential investment in subscribing for Units in the PrivateInvest Select Mortgage Trust No 2.

Summary of the Investment

2 Summary of the Investment

Lender

Borrower

PrivateInvest Capital Securities Limited ACN 611 892 249 as trustee for PrivateInvest Select Mortgage Trust No 2 ABN 48 137 303 556.

Cuda Homes Pty Ltd ACN 628 634 453 in its personal capacity (Borrower).

Guarantors ■ Cuda Homes Pty Ltd ACN 628 634 453 (Corporate Guarantor) and ■ Colin Billyard, Karen Jewell and Michael Jewell (Individual Guarantors).

Investment Purpose

Investment Amount

Target Return

To facilitate the construction of fourteen townhouses.

$9,570,000

Targeted income of 10.75% per annum, net of fees, costs and expenses. This is not a forecast or guaranteed return. The Target Annual Return has been calculated on the basis of all drawn funds being calculated using Interest Rate B. Given Interest Rate A is only active during the period where Conditions Subsequent d) has not been satisfied, the Investor will benefit from the upside of Interest Rate A during this period. See section 3 – Interest Rate, for more details. This is forecast to improve the Target Annual Return.

Investment Term

Minimum Investment Amount

18 months, minimum term of 16 months.

The minimum subscription is $100,000, although the Trustee may accept lesser amounts in its absolute discretion.

Distributions The Interest Rate to the Borrower is capitalised and all unpaid interest will be paid by the Borrower on completion of the Loan. This means Investor distributions will also be paid on completion of the Loan, allowing time for external accounting and taxation verification for windup of the Trust.

Withdrawals

An investment in PrivateInvest Select Mortgage Trust No 2 Units is an illiquid investment. Investors will not be able to withdraw their investment in PrivateInvest Select Mortgage Trust No 2 Units until the Loan has been fully repaid.

Issue of Units

PrivateInvest Select Mortgage Trust No 2 Units will be issued to Investors after satisfactory Application by the Investor and approved by the Trustee.

Loan Purpose and Details

Loan Purpose and Details

Sources and Uses of Funds

The Facility Limit is comprised of the following Components and Sub- Limits:

Interest Rate

Interest Rate A: 11.75% per annum.

Interest Rate B: 9.75% per annum.

An Interest Rate of 11.75% per annum (Interest Rate A) applies to all amounts outstanding under the Facility (including, without limitation, all drawings, capitalised interest, fees, costs, and expenses).

Upon the Borrower providing evidence of two qualifying pre-sales (Condition Subsequent d), the Interest Rate will reduce to 9.75% per annum (Interest Rate B). The Facility Limit is calculated on the assumption that Interest Rate A is applied during the first 12 months of the loan term with Interest Rate B to be charged thereafter. Should the Borrower complete Condition Subsequent d) at an earlier date, the Facility Limit will be reassessed from this date at Interest Rate B. Any interest savings will then be released towards contingency to the Proposed Development.

Interest is calculated from the date of the first Utilisation under the Facility and is capitalised monthly in arrears.

Line Fee 2.00% of the Facility Limit per annum. The Line Fee is calculated from the date of the first Utilisation under the Facility and is capitalised monthly in arrears.

Description of Mortgage Security

The Borrower has granted a real property mortgage over the property 479 –481 Pacific Highway, Asquith, NSW 2077 and more particularly described as the land contained in Lots 1 and 2 Deposited Plan 1003285 (being the secured property) in favour of PrivateInvest Capital Securities Limited as trustee for PrivateInvest Select Mortgage Trust No 2 (Secured Party) (Mortgage).

The Mortgage takes priority over all other Security Interests over the Mortgaged Property other than any Security Interest mandatorily preferred by law or a Security Interest which is expressly permitted to have priority over the Security under the terms of the Finance Document.

In addition, the Borrower has granted Second Mortgages over the Additional Secured Properties:

■ 4 Bresnihan Avenue, North Kellyville NSW 2155, described as Lot 11 in Deposited Plan 1171513; and

■ 35 Rupert Crescent, Morayfield QLD 4506, described as Lot 710 in Survey Plan 282275.

The Additional Secured Properties are currently financed with Westpac and will be released upon completion of Conditions Subsequent d).

The current indebtedness of the Additional Secured Properties is as follows:

■ 4 Bresnihan Avenue, North Kellyville NSW 2155:

■ $2,100,000 Valuation (IntelliVal Automated Valuation Estimate)

■ $1,560,000 Loan (currently $1,100,000 of redraw available)

■ Net Equity 540,000 (when fully drawn)

■ 35 Rupert Crescent, Morayfield QLD 4506:

■ $680,000 Valuation (Borrower’s opinion)

■ $400,000 Loan

■ Net Equity $280,000

The figures regarding the indebtedness of the Additional Secured Properties above are approximate only.

Additional Security General Security Agreement

The Grantor (in its personal and trustee capacities) will provide a General Security Agreement (GSA) in favour of the Secured Party. The GSA creates:

■ a PPSA Security Interest in the Personal Property of the Grantor, the Personal Property being:

■ all of the present and after-acquired (and other future) personal property of the Grantor (but excluding interests in personal property to which PPSA does not apply);

■ all Trust Property which is personal property (but excluding interests in personal property to which PPSA does not apply);

■ to the extent PPSA applies to it, the Trustee’s Indemnity and the Trustee’s Lien; and a charge over all the Grantor’s interest in the Other Property, that being all of the present and after-acquired (and other future) undertaking, assets, rights and interest of the Grantor, including:

■ all real and personal property, things in action, goodwill, uncalled and called but unpaid capital wherever located other than Personal Property;

■ all the Trust Property of the Trust which is not Personal Property; and

■ to the extent PPSA does not apply to it, the Trustee’s Indemnity and the Trustee’s Lien.

■ The parties intend that the GSA is to have priority over all other Security Interests given by the Grantor other than any Security Interest mandatorily preferred by law.

■ Intercreditor deed between the first and second mortgagors.

Personal Guarantees

Colin Billyard, Karen Jewell, and Michael Jewell (“Individual Guarantors”) will provide limited guarantees and indemnity in favour of the Secured Party under the Facility Agreement.

The Individual Guarantors’ liability extends to the whole of the Secured Moneys and any other applicable recoverable costs from the Loan Facility.

The standard Know Your Client (KYC) checks have been undertaken and an Accountants statement has been obtained stating there is no outstanding ATO liabilities by the Individual Guarantee.

Primary Loan Repayment

Sale of the completed stock.

■ The primary loan repayment will be via achieving sales that settle upon completion of the asset and prior to expiry of the Loan Term. Given the current market valuation, the Borrower will require approximately 9 sales (this is variable due to there being three and four-bedroom townhouses which will be sold at different prices) to repay the Loan Amount.

■ A minimum of two pre-sales are required before month 13 of the Loan Term.

■ Assuming these sales occur at the at the average valuation price of $1,210,714 (ex GST) (per the Ray White Valuation), this provides for a residual debt amount of $8,578,572. To clear this debt, the remaining 12 townhouses would need to be sold at a rate of $714,881 (ex GST).

Valuation

A Valuation was completed by Ray White dated 18 February 2023. An overview of the Valuation is as follows:

■ Market Value ‘as is’ $4,675,000 (ex GST)

■ Market Value ‘as if complete’ $16,950,000 (ex GST) (individual sales)

■ Market Value ‘as if complete’ $14,800,000 (ex GST) (in one line)

Ray White is one of the most respected independent property valuation firms in Australia with over 118 years of experience in the real estate and property. The Valuation has been assigned to PrivateInvest Capital Securities Limited for First Mortgage Security Purposes.

Marketability of the completed project:

■ The Valuer has noted that the proposed dwellings will appeal to both owner occupiers (including a mixture of 2nd home buyers, young families, and local downsizers) as well as investors having regard to the dwelling mix, price point, and location of the dwellings.

■ The Valuer has also noted that the busy road frontage, location within close proximity to public transport and amenities, average to larger than average internal living areas, and the prevailing market conditions (softened demand) as the key points that will affect the value and marketability of the project.

Competing supply within the market:

■ The Valuer makes reference to six comparable projects either under construction or with Development Approval in the surrounding area.

■ This is expected due to the rezoning that has taken place in Asquith to accommodate the growth and demand in the suburb.

■ The Valuer does note that there is limited sales evidence in the immediate location which may be the reason for such a large number of comparable developments in the short-to-medium term horizon.

Projected sales rate for the finished product:

■ The Valuer has adopted seven pre-sales with the remaining seven sales occurring over five months post construction completion (1.4 per month).

Suitability of the Site for the proposed development:

■ The Valuer considers the highest and best use of the Site to be a residential development in line with the proposed plans.

The Valuation has adopted both a direct comparison and hypothetical development analysis methodology. Comparable sales are as follows:

25-27 HEATH STREET, ASQUITH

Comparison: Smaller size complex, superior quiet street position being closer to amenities, smaller size internal living area, inferior age and condition, inferior finishes, older second-hand stock. Overall, higher values are warranted for the proposed three-bedroom townhouses.

17 HALDANE STREET, ASQUITH

Comparison: Larger size complex, superior position, smaller size internal living area, inferior finishes, inferior second-hand stock. Sold in stronger market conditions. Overall, higher values are warranted for the proposed three-bedroom townhouses.

8-18 BALDWIN AVENUE, ASQUITH (‘OFF THE PLAN’ NOT YET COMPLETED)

Comparison: A larger size complex, superior position in a quiet street and being closer to amenities, similar size internal living areas, superior finishes, similar to inferior accommodation. Earlier sales sold in a superior market condition. Overall, similar values are warranted for the proposed threeand four-bedroom townhouses.

6-12 NURSERY STREET, HORNSBY

Comparison: Larger size complex, superior location, smaller size internal living areas, inferior finishes, inferior second-hand stock. Overall, higher values are warranted for the proposed fourbedroom townhouses.

153-165 GROSVENOR STREET, NORTH WAHROONGA

Comparison: Larger size complex, superior location although situated further from amenities, larger size internal living area compared to the three-bedroom townhouses and smaller size internal living area compared to the four-bedroom townhouses, dated finishes, older established complex. Sales sold in stronger market conditions. Overall, lower values are warranted for the proposed three- and four-bedroom townhouses.

The Valuer concludes that, based on this evidence:

■ Three-bedroom: $1,060,000 to $1,850,000 ($9,783 - $12,116/m2); and

■ Four-bedroom: $1,127,500 to $1,905,000 ($10,233-$12,740/m2). Subsequently, the Valuer has reached the following values for the proposed development:

■ Three-bedroom: $1,309,545 ($10,727/m2) (average); and

■ Four-bedroom: $1,416,667 ($8,666/m2) (average).

This would suggest that the three-bedroom dwellings at the middle of the market and the four-bedroom dwellings at the lower end of the market (based on $/m2 basis).

Secured Property

4 Secured Property

Security Property

The property located at 479 – 481 Pacific Highway, Asquith, NSW 2077 and more particularly described as the land contained in Lots 1 and 2 Deposited Plan 1003285.

Purpose

To facilitate the construction of fourteen townhouses and the repayment of the First Mortgage site finance Loan Facility provided by PrivateInvest in November 2022 (PrivateInvest Select Mortgage Trust No 1).

Property Location

The Site is situated on the western side of Pacific Highway approximately 32 kilometres by road northwest of the Sydney CBD (by road).

Despite being situated on a main road, this section is now more of a scenic route and a local roadway for residents within the general locality, with the completion of the Sydney-Newcastle F1 Motorway acting as the major connection between Sydney and the north.

The Site is benefited by having Asquith Oval to the rear, and located within one kilometre from the local train station, supermarket (Coles), schools (the Valuer notes six schools and a TAFE), and golf course. In addition to the nearby rail, the Site is also in close proximity to public buses, with services through to Hornsby, Mount Ku-ring-gai and Berowra. A larger regional shopping facility (Westfield Hornsby Shopping Centre) is located appeoximately 3.2 kilometres to the south.

The Valuation notes that the immediate surrounding development comprises a mix of dwellings of varying vintage, “many of which will be replaced in the short-medium term with multi-dwelling complexes following the rezoning of the precinct and modern multi-dwelling complexes”.

Asquith has experienced an 83.53% population increase from 2016-2021 (2016 and 2021 Census Data).

Housing Demand in Asquith

The composition of supply of housing in Asquith is heavily favoured towards units and apartments, with townhouses making up just 8.7% of all dwellings, below the NSW average of 11.7%. Two bedrooms dwellings make up 39.3% of total supply (NSW average 22.7%) with three and four+ bedrooms (26.8% and 22.7%) both well below their respective state averages (34.7% and 33.9%) (2021 Census Data).

Asquith’s large population increase over the past 5+ years has contributed to a strong growth in demand and price. As the Valuer has noted, there is limited evidence of truly comparable sales in Asquith (i.e. new townhouses for sale), however, the rezoning of much of the suburb to accommodate medium density housing has allowed for a number of new townhouse developments to be proposed (and subsequently approved, with some now under construction). As evidenced, the vast majority of these developments incorporate a higher number of dwellings and are all within close proximity to one another. The Borrower has indicated that they have modified their original plans to reduce their yield to 14 townhouses and increase the size of each townhouse footprint.

According to realestate.com.au, Asquith’s median house price in February 2023 is:

■ $1,503,000 (three-bedroom)

■ Down 0.5% Y-o-Y

■ 605 interested buyers

■ 3 houses available in the past month

■ 17 sold in the past 12 months

■ 61 days - median time on market

■ $1,660,000 (four-bedroom)

■ Down 8.9% Y-o-Y

■ 575 interested buyers

■ 3 houses available in the past month

■ 11 sold in the past 12 months

■ 52 days – median time on the market

The above snapshot of houses sold vs median value indicates a sustained (and elevated) volume of sales through 2020 to 2022. Median value reached a trough during late 2018/early 2019 before demonstrating strong growth through late 2019/early 2020 through to May 2022. As expected, the median value has since declined from over $1,650,000 from May 2022 due to rising interest rates and the higher cost of living.

Owner Occupier vs. Investor Buyer

Households in Asquith are primarily couples with children, with the ratio of owner occupiers to renters approximately 4:1 (CoreLogic, 2023).

The Valuer’s review of the rental market demonstrates low vacancy rates with average for Sydney at 1.7% in December 2022. SQM Research’s suburb report for Asquith residential vacancy rates, it demonstrates that Asquith’s rental vacancy rate of 1.2% is below the Sydney average and approaching levels not observed since 2017.

Suburb Profile Report Asquith NSW 2077

Houses:

CoreLogic - 2023

Houses:

Rents in Sydney have risen dramatically in the past 12 months due to the reopening of international borders and a shortage of housing.

SQM Research – Asquith Residential Vacancy Rates

Description of Property ‘As Is’

The Site is a regular shaped consolidated residential redevelopment site with moderate crossfall from west to east and slopes from the street frontage to the rear boundary, totalling 1,852.7m2 as per the registered Deposited Plan. The Site is currently improved with two older style residential buildings, however, the Valuer states that the highest and best use of the property is the Proposed Development in line with current approvals (no internal inspection of the improvements has been undertaken).

Services: Electricity, reticulated water, sewerage, gas, NBN and telephone services are available for connection to the Site upon completion of the proposed development.

Zoning: The Site is zoned ‘R3 – Medium Density Residential’ by virtue of the Hornsby Local Environmental Plan 2013.

The objectives of this zoning are to:

■ Provide for the housing needs of the community within a medium density residential environment;

■ Provide a variety of housing types within a medium density environment; and

■ Enable other land uses that provide facilities or services to meet the day to day needs of residents.

Flood Status: Not subject to flooding.

Critical Habitat: The Site does not include or compromise critical habitat.

Heritage: The Site has no heritage listed improvements and is not situated in a Heritage Conservation Area.

Road Widening: The Site is not affected by any road widening or road realignment proposal.

Bushfire: The Site is not bushfire prone.

Description of Property ‘As If Complete’

Development Approval:

A Development Approval (DA/969/2017) was granted by Hornsby Shire Council on 26 February 2018 for the “demolition of the existing structures and construction of a two-storey townhouse development with attics comprising 14 townhouses over basement car parking” (expiry date 21 August 2025). Operational Consent was granted on 21 August 2020 by Hornsby Shire Council and the existing Development Approval is current through to 21 August 2025, if physical commencement has not occurred.

A separate Development Application must be made for the Strata subdivision of the development. In addition to this, a Development Application condition is for the two allotments to be consolidated into one allotment, noting that “the [Borrower] is to submit the plan of subdivision to consolidate allotments to the NSW Department of Lands at least 4-6 weeks prior to seeking an Occupation Certificate.”

Construction commencement is awaiting granting of the Construction Certificate, which is expected imminently.

The Proposed Development is to comprise of 14-two storey with attic townhouses over a single level of basement parking for 31 vehicles i.e. two spaces per townhouse, including three visitor parking spaces. Vehicular access will only be available via a left-in, left-out via the Pacific highway.

The development mix will comprise the following mix of 11 three-bedroom and three four-bedroom townhouses:

Construction Program

The Borrower has provided a Financial Cost Plan, completed by MCG Quantity Surveyors (“MCG”). The report confirms zero variation between the contract price and their independent estimate. MCG have reviewed the construction program (noting that the proposed commencement date of 1 March 2023 is now 1 April 2023) with the opinion that a period of 16 months is achievable, however, the Builder has indicated that the construction period will take 17 months. The Loan Term of 18 months provides for two month’s contingency over and above MCG’s construction period opinion (noting there is an additional one month interest provision i.e. noted in the Borrowers Funding Table).

The construction costs total $6,700,000 (ex GST) in addition to a 5.00% contingency of $335,000 (ex GST) (Total = $7,035,000).

Development Management

The Borrower has indicated that there will always be at least one of either Colin Billyard, Michael Jewell, or Anthony Cartwright (Site Foreman) on site at all times during the construction period. Each of these three individuals’ bios are as follows:

Colin Billyard – CJ Billyard Builders has considerable experience as a developer and builder. Their most recent comparable experience includes a nine townhouse development in Parramatta (29% profit on cost) and a 14 townhouse development in Castle Hill (34% profit on cost).

Michael Jewell – Guarantor and friend/industry connection of Colin’s for much of their careers. Michael holds a current Builder Licence in NSW, valid through to 21 November 2025. Michael is a construction project manager with more than 35 years of experience in residential and commercial projects. His skillset includes preparation of construction documents, estimating costs, project budgeting, subcontractor management, regulatory compliance, planning and design, and building code knowledge.

Anthony Richardson – Site Foreman, responsible for the day-to-day direction of the construction team. Anthony has been in the construction industry for 20 years, starting in the labourer before achieving roles such as site manager, contract administrator, and project manager. He has managed townhouse developments ranging from construction of 19 to 32 townhouses. His experience extends to an extensive knowledge of construction methodology in addition to various high level financial responsibilities.

Architect/Project Manager

Mackenzie Architects International (MAI) have been engaged for the project. In addition to their architectural services, MAI will also provide end-to-end project management including urban design, master planning, cost efficiency and development analysis, where necessary. MAI will conduct monthly site visits.

MAI’s plans have been submitted and approved by the Hornsby Shire Council.

Marketing

Located in Sydney Hills District, Sciberras Group (SG) is a Real Estate agency comprised of passionate & award-winning professionals. SG prides itself in projects and marketing, investing in high quality stocks, premium designs, and the best digital platforms to maximise exposure to the market.

Sciberras Group have provided a Project and Sales Marketing Proposal to achieve the best price for the proposed product. This includes digital marketing on Realestate.com, Domain, Sydney Morning Herald, nine.com. au, and SG Website/social media, property marketing with a fencing banner, branding and brochure distribution. The total cost of marketing is expected to be $38,212.23 inc GST plus sales commission of 2.20% inc GST.

PrivateInvest has met with the Agent and Borrower to discuss their preliminary marketing plan. The Borrower has since instructed the Agent to commence their detailed marketing plan and strategy which will be available prior to the completion of the first display townhouse.

Architect’s Side Profile Proposed Plans Artist

Risk and Mitigants

Risk and Mitigants

Sales Risk Risk of Delay in Sales

Given the proposed product is valued at the lower end of the market, it provides for a more cost-effective product to both owner-occupiers and investors without compromise on size or internal fit out. If market conditions remain tight through the construction period with high interest rates/less purchasing power, it is expected that this product would remain appropriate to prospective buyers, as it is a new product at the lower end of comparable products in the area.

The implementation of a two-stage interest rate step-down condition encourages acceleration of the sales program. As previously mentioned, the Borrower intends to have complete a display townhouse (by month eight of the Loan Term). It is at this point they will accelerate their marketing and sales program given they will have a finished townhouse to aid their marketing and sales program, alongside allowing prospective buyers some flexibility over the final fixtures and fittings of their purchase.

The Project and Sales Marketing plan provided demonstrates a relatively cost-effective program that will deliver a suite of physical and digital marketing collateral to assist with accelerating the ‘off the plan’ sales of the property. The appointed agent has over ten years’ experience and has a demonstrated track record of success in the region. After meeting with the Agent, PrivateInvest believes they are capable of successfully marketing the Proposed Development.

Construction Risk Risk of Cost Overruns and Delays

Construction loans infer a risk of cost overruns and delays. The following items are considered mitigants to construction risk:

1. MCG’s satisfactory independent review of construction term and cost.

■ MCG have confirmed zero variation between their cost estimate and that of the construction contract.

■ MCG have advised a construction term of 16 months. The Loan Term provisioned is for 18 months (plus one month interest provision).

2. Key personnel and their relevant construction management experience.

■ Colin Billyard of CJ Billyard Builders has completed comparable developments and has confirmed that this will be the sole project that he is working on during the Loan Term;

■ This ensures that his resources are committed to this project, limiting slippage in time and placing a focus on ensuring costs are well managed;

■ Michael Jewell has over 35 years of experience in residential and commercial projects, with a strong focus on project budget accuracy, subcontractor management, and estimating costs; and

■ Anthony Richardson has similar skills across his 20-year career. Anthony has managed townhouse developments twice the yield of the Proposed Development and has relevant experience managing the financial responsibility of such projects, adhering to budgeting requirements and maintaining cashflow forecasts in line with quantity surveyor assessments.

■ The construction program has provisioned a 5% contingency, in line with industry standards.

Builder Insolvency

■ The Builder has completed similar projects with profitable outcomes achieved.

■ Costs for the build are well understood given the Borrower/Builder experience in this type of product.

■ MCG costings are in line with the construction contract so another builder could be appointed if necessary; there is further buffer in the program timeline given the MCG report opinion of a 16-month construction term compared with the proposed 17 months.

■ Directors and owners of the borrowing entity have other assets which can support the project as required.

■ Relatively simple nature of the build, it is unlikely that there will be other cost or process pressures affecting the builder.

■ In addition to the project contingency, there is construction retention of 5% to be held by the Lender.

The Borrower and Guarantors

6 The Borrower and Guarantors

The Borrower The Borrowing entity is Cuda Homes Pty Ltd ACN 628 634 453

An Equifax search of the company and its Directors showed no adverse on file and a low and acceptable number of credit enquiries.

Cuda Homes Pty Ltd’s Directors are:

■ Colin Billyard (individual guarantor) (25% ownership)

■ Karen Jewell (individual guarantor) (25% ownership)

■ Michael Jewell (individual guarantor) (25% ownership)

The remaining 25% ownership is held by Jennifer Billyard.

The below organisation chart provides a simplified view of the Borrowing Entity and all related parties.

The Guarantors Each of the following corporate entities

■ Cuda Homes Pty Ltd ACN 628 634 453 in its personal capacity.

■ Net assets disclosed as $2,803,000 which comprises predominantly Real Estate (Security Property).

(each a Corporate Guarantor and together the Corporate Guarantors); and Each of the following individuals

■ Colin Billyard - Net assets disclosed as $5,615,000 which comprises predominantly real estate, cash, and business equity.

■ Karen Jewell and Michael Jewell - Net assets disclosed as $3,341,800 which comprises predominantly real estate.

Loan Assessment and Management

Loan Assessment and Management

Legal Documentation Fees

Loan Conditions

Precedent

Due diligence on the Loan by PrivateInvest has been completed and formal legal documentation has commenced with a target settlement date of early April 2023.

a. Originals of each Finance Document properly executed, stamped and registered, where applicable;

b. Satisfactory legal, commercial and property due diligence, including appropriate environment and Material Documents review;

c. Evidence that each Obligor has obtained all Authorisations which are required to enable that Obligor to enter into and perform its obligations under the Finance Documents to which it is expressed to be a party;

d. Evidence that each Security Interest under the GSA and each other Security (other than a Property Mortgage) has been registered under the PPSA and with each other Government Agency with which registration is required (free from all prior Security Interests and third party rights and interests and each other Security (including each Property Mortgage) has been or will be registered (free from all prior Security Interests and third party rights and interests);

e. Company constitution of the Borrower;

f. A Current “As Is” and “As If Complete” market valuation of the Security Property, net of GST, for first mortgage security purposes, by an independent valuation firm and dated not more than 120 days prior to the date of the Finance Documents;

g. Construction contract for the Proposed Development of the Security Property executed by both the Borrowing entity and contractor (Builder), including the following amendments;

h. A 5% retention is to be withheld by the Lender from each progress claim payment; and

i. Progress claim payments and drawdowns are to be claimed on a cost to complete basis.

j. Local Real Estate Agent market appraisal of the proposed product and its saleability to the market, including a marketing plan (including projected sales per month, commentary on changes to the fixtures and fittings, and budget) that is to commence on or before completion of the first display home;

k. Bios of the key persons (Colin Billyard and Michael Jewell) and elected Foreman that will be completing the Proposed Development;

Loan Conditions

Subsequent

l. Two additional properties taken as security to be released upon completion of Condition Subsequent d);

m. Updated signed Assets and Liabilities statement of both the Borrowing entity and all Guarantors;

n. All documents and other evidence requested pursuant to the Lender’s AML / “know your customer” requirements;

o. Group Ownership/ Borrowing Structure diagram;

p. Discharges of all existing encumbrances in relation to the Security Property and the Obligors;

q. In respect of the Borrower, three years of certified financial statements, tax returns and ATO portal running statements;

r. Review of insurance certificates of currency and policies from insurers approved by the Lender. The Lender is to be noted as mortgagee or interested party on all relevant policies; and

s. Any other conditions precedent that the Lender requires;

t. Any other conditions precedent that the Lender requires. And

u. Final Legal Opinion from the Lender’s counsel.

a. Prior to payment of the first construction progress claim, the Borrower is to provide a final Construction Certificate relating to the Proposed Development of the Security Property. MCG Quantity Surveyors is to review the clauses within the Construction Certificate. This Review by MCG Quantity Surveyors is to be provided in addition to the Construction Certificate;

Forming part of this condition subsequent, MCG is to provide commentary on the following missing information as noted in their report:

■ Evidence of the Structural Drawings produced by Meares Consulting Pty Ltd to have been approved and stamped by Hornsby Shire Council;

■ Evidence of the Electrical Drawings produced by Webb Australia Group Pty Ltd to have been approved and stamped by Hornsby Shire Council;

■ Evidence of the Hydraulic Drawings produced by ADCAR Consulting to have been approved and stamped by Hornsby Shire Council;

■ Evidence of the Stormwater Drawings produced by Greenview Consulting to have been approved and stamped by Hornsby Shire Council;

■ Evidence of Mechanical Services Drawings to be provided and approved and stamped by Hornsby Shire Council;

■ Evidence of an Energy Certification for the Proposed Development of the Security Property;

■ Evidence of a Geotechnical Report pertaining to the existing site conditions for the Proposed Development of the Security Property;

Lawyers for Loan documentation

b. Evidence of all required equity (as per the Facility Limit) for construction progress claims (by invoices and receipts) to be paid prior to the Lender funding the subsequent construction progress claims;

c. The Borrower is to have completed one display home by the end of the eighth month of the Term; and

d. The Borrower is to provide evidence of two qualifying sales contracts from unrelated buyers before month 13 of the Term. Upon completion, this will trigger:

a. Release of Additional Secured Properties;

b. all future interest charges to be calculated using Interest Rate B; and

c. monthly progress Payments from month 13 onwards to be funded. A qualifying sale contract is one which:

a. is exchanged and executed as a non-arm’s length transaction;

b. is unconditional and not subject to finance;

c. has a 10% cash deposit paid to the nominated Real Estate trust account; and

d. any other conditions the Lender reasonably requires.

Upon completion of Condition Subsequent d), the Borrower may elect to have an updated Valuation completed. Should the gross realization value of the ‘As If Complete’ property increase, based on the price of the sales, the Borrower may request of the Lender to receive a cash payment equal up to the equity paid by the Borrower towards construction costs of the Loan, provided this amount does not exceed the Financial Covenant (this is entirely the Lenders discretion).

Lavan Legal is a leading independent law firm based in Western Australia that has operated for over 120 years. PrivateInvest is working closely with Lavan banking and finance division on the formal documentation for the transaction.

Lavan Legal

Level 20, 1 William Street, Perth, WA 6000 Phone: +61 8 9288 6000

Loan Fees and Costs

8 Loan Fees and Costs

The below fees and costs identify those paid by the Trust for the management of the Loan and those paid by the Borrower for valuing, sourcing, originating, arranging, and administering the Loan documentation.

These fees and costs are in addition to the fees, costs, and expenses disclosed in the Loan Information Memorandum which are payable out of the assets and the Trust referable to Units (including PrivateInvest Select Mortgage Trust No 2 Units on a proportionate basis).

All fees and costs quoted exclude GST unless otherwise indicated.

Investment and Facility Management / Agent Fee

Investment and Facility Management fee will be charged in respect of each class of units, payable from the assets of the trust referable to those units.

The Investment and Facility Manager is entitled to a fee of 1.95% per annum of the total drawn Loan facility for PrivateInvest Select Mortgage Trust No 2. The fee is accrued monthly and paid one month in arrears.

Trustee Fee

The Trustee is entitled to charge a fee of 0.25% per annum of the drawn loan balance payable monthly in arrears, subject to a minimum payment of $6,000 per month, throughout the term of the Loan.

Other Trust Costs

Establishment of Unit Trust, legal costs, accounting and audit, production the Loan Information Memorandum, promotional, capital raising and wind-up costs.

Loan Establishment Fee

2.00% of the Facility amount plus GST.

Paid by the Borrower to the Investment and Facility Manager at Financial Close.

Legal Costs, Valuation, and Stamp Duty

Paid by the Borrower.

Taxation

For Investors, there are tax implications associated with investing and receiving income from the Trust.

The following provides a summary of the general tax considerations for Australian resident Investors. This summary is based on the income tax law as at the date of this Loan Information Memorandum. However, income tax laws and their interpretation are subject to change and changes may have consequences for investors.

TAXATION – INVESTORS SEEK OWN ADVICE

Each Investor must take full and sole responsibility for the associated taxation implications arising from an investment in the Trust including any change in the taxation implications arising during the term of their investment. It is recommended that Investors obtain their own professional and independent taxation advice before investing in the Trust.

INCOME TAXT TREATMENT OF THE TRUST

As a Unit Trust, the Trust will effectively be treated as a flow-through vehicle for income tax purposes provided that the Trust distributes all of its income to the Trust’s Investors on an annual basis. The Trustee should therefore not pay Australian income tax on the taxable income derived by the Trust. This is on the condition that the Trust will not be taxed as a company under the public trading trust provisions.

INCOME TAX TREATMENT OF INVESTORS

Provided that the Trust is treated as a flowthrough vehicle, Investors will be assessed on the taxable income derived by the Trust, based on their proportionate share of the annual income of the Trust that is distributed to them in that year. The Trust’s Investors will be required to include their share of taxable income in their tax return.

ACCRUALS TAXATION

It is possible that the Trust may derive assessable interest income on accrued interest prior to those amounts being received by the Trust or distributed to Investors. Accordingly, an Investor may be taxable on interest income of the Trust prior to receiving a distribution.

ANNUAL REPORTING

The Trustee will be required to provide distribution information (including tax components) to the ATO on an annual basis by lodging the Annual Investment Income Report. The Trustee will provide annual tax distribution statements in accordance with the ATO’s guidelines for managed investment trusts. The tax distribution statement will reconcile the cash distribution with the taxable distribution for the income year.

TAX FILE NUMBER (TFN) AND AUSTRALIAN BUSINESS NUMBER (ABN)

It is not compulsory for Investors to provide their TFN or ABN and it is not an offence if you decline to provide them. However, unless an exemption applies, if an Investor does not provide their TFN or ABN tax will be deducted from income distributions at the highest personal marginal tax rate plus the Medicare Levy (and any other levies which may be required to be withheld from distributions from time to time).

The TFN, ABN or an appropriate exemption can be provide on the application form when making an investment in the Fund. The collection of TFNs is authorised and their use is strictly regulated by taxation and privacy laws.

GOODS AND SERVICES TAX (GST)

Unless stated otherwise, the fees and other costs set out in this Loan Information Memorandum are exclusive of GST.

FOREIGN INCOME AND FOREIGN TAX CREDITS

Australian residents are required to include in their assessable income any share of any foreign income received by the Trust which forms part of the Trust’s net income. Investors will normally be entitled to a tax offset or credit in relation to any foreign taxes paid in respect of foreign sourced income received by the Trust and distributed to them.

NON-RESIDENT INVESTORS

Where an Investor is a not an Australian resident (or provides details to the Trust that indicate that they are residing outside of Australia for tax purposes), the Trustee will be required to withhold tax on distributions.

The rate of withholding tax will depend on whether the income derived by the Trust is treated as interest:

■ Where the amount is treated as interest (or in the nature of interest), the Trustee will be required to withhold 10% from the amount of the distribution. This amount will constitute a final tax. Non-resident investors may also be subject to tax in the country of their residence, but may be entitled to a credit for Australian withholding tax paid.

■ Where the amount is not treated as interest, the Trustee will be required to withhold tax at the marginal rate applicable to the Investor. This will constitute a non-final withholding tax. Non-resident investors will be required to lodge an Australian income tax return, and will receive a credit for the tax withheld.

Investment Risks

10 Investment Risks

Before applying for an investment, you should consider whether the Trust, and the Loan, is suitable for you given your investment objectives. An investment in the loan through the Trust should be considered a short-term investment.

All investments involve risk and there are many factors that can impact on the performance of an investment. Many risk factors fall outside the Trustee and Investment and Facility Investment Manager’s control and cannot be completely mitigated.

In general, the risks associated with the Loan provided by the Trust relate to the risk of nonpayment of interest or recovery of capital on maturity of the Loan. These two factors are intimately linked with the success or failure of the property development project, which may be impacted by the risk factors listed below.

PROPERTY MARKET AND OTHER PROPERTY RELATED RISKS

An investment in the Trust comes with risks associated with lending against property. These include, but are not limited to:

■ A downturn in the value of the properties and in the property market in general, which can be caused or exacerbated by many factors, including for example: restrictions on the availability of credit both locally and globally;

■ A downturn in the economy (at either a local or global level, or both, such as for example: the events commonly referred to as the “global financial crisis” or the events caused by the COVID-19 pandemic);

■ Amendments to laws and/or government policy having a detrimental effect on the Trust or the property development project; and

■ The value of the properties could go down, depending on factors such as market conditions and when properties are sold and

there is always a risk that they cannot be sold for a price sufficient to repay advances made by the trust.

DEVELOPMENT AND CONSTRUCTION RISKS

There are numerous risks associated with property development projects which can impact on the Borrower’s ability to meet payments of principal or interest owed to the Fund in relation to the Loan.

These include, but are not limited to:

■ an unexpected escalation in construction costs for a project;

■ delays caused by contractors, unions, government planning agencies or other parties;

■ defaults by purchasers or tenants;

■ the inability to sell or refinance property on completion; and

■ inability to achieve the anticipated sales prices and meet the development and construction expenses in the independent valuation.

The Investment and Facility Manager has considerable experience in managing development and construction risks to which the Trust is exposed.

BORROWER RISK

There is a possibility that the Borrower may experience financial difficulties (which may or may not be related to the project or property being financed) or be placed under administration. Under these circumstances, there is a possibility that the Trust may not receive interest owed on the Loan, or full repayment of the Loan principal. The Investment and Facility Manager has significant experience in mitigating this risk by lending to credible developers with a solid and proven track record of delivery.

BORROWER FINANCING RATE RISK

There is a risk that unfavourable movements in interest rates may increase any financing expense borne by the development project. This in turn may contribute to any losses incurred, which will increase the likelihood of the Borrower being unable to meet interest expenses or repay principal on the Trust.

TAX AND STAMP DUTY RISK

Changes to tax law and policy (including for example, any changes in relation to how income of the Trust is taxed, or in relation to the deductibility of expenses, or changes to stamp duty law) might adversely impact either the Trust, or the Borrower and project to which the Trust lends. Investors should obtain independent tax advice in respect of an investment in the Trust, however, it is not possible to predict future changes to tax law or policy.

INSURANCE RISK

Various factors might influence the cost of maintaining insurance over the property or development project, or the extent of cover available. Increased insurance costs, or limits on cover, can have a negative impact on the performance of a development project, which, in turn, may negatively impact on the ability of the Borrower to repay the Loan principal.

ENFORCEMENT RISK

Where the Investment and Facility Manager takes enforcement action in respect of any default by the Borrower, the costs incurred by the Investment and Facility Manager in doing so could be substantial.

The Investment and Facility Manager may use its own resources to pay for those enforcement costs (such as the costs of appointing a receiver, legal fees in enforcing against the Borrower, agent’s commissions for sale of any secured property etc.). It may also produce a third party to underwrite the enforcement expenses. The Investment and Facility or third party will have the right to recover these costs from the proceeds received from the enforcement action before any payments are made to the applicable

Investors. This will most likely lead to a reduction in distributions paid to the Investors and, depending on whether the enforcement costs can ultimately be repaid out of the proceeds from the sale of any secured property, may result in the Investors suffering a loss.

It is also possible that the trustee will undertake a further capital raising to raise the capital required to pay for the expenses associated with enforcement. There is therefore a risk that Investors may be requested to contribute further capital to Trust enforcement costs. It is highly likely that any such future capital raising will be undertaken at a price less than the original issue price for the relevant Units and may therefore dilute the proportional holdings in the Units of those Investors that decide not to contribute further capital.

DOCUMENTATION RISK

A deficiency in the legal documentation relating to the Loan could, in certain circumstances, adversely affect the return on that Loan. This may make it difficult for the Trust to enforce any security it holds (e.g. first mortgage) in respect of the arrangement and may also affect the ability to recover any penalties imposed against the Borrower. To mitigate against this risk, the Investment and facility Manager will employ experienced lawyers who specialise in the area of banking and finance law for property transactions.

WITHDRAWAL OF INVESTMENT

An investment in the PrivateInvest Select Mortgage Trust No 2 is an illiquid investment. Investors will not be able to withdraw their investment in the PrivateInvest Select Mortgage Trust No 2 until the Loan has been fully and finally repaid. You should only consider an investment in the PrivateInvest Select Mortgage Trust No 2 if you are not likely to require access to your investment in the short term.

About PrivateInvest

PrivateInvest specialist investment finance team has decades of property experience in structuring first and second mortgage debt and preferential equity at leading investment firms and institutions. The company is exceptionally placed to identify, assess, and work with qualified borrowers seeking finance for a range of development, construction, and other property projects across Australia. Borrowers have direct access to decision makers and support networks at all stages of their property projects – this sets PrivateInvest apart from larger banks and financial institutions.

The Trustee Board of Directors, technical management team and Investment Review Committee are well placed to identify the right loan opportunities and assess the credit risk profiles – providing oversight of the risk management frameworks and execution strategies.

Through the experience of the team, its focus on transparency, oversight, collaboration, and governance, PrivateInvest has established an investment fund management company that is big enough and small enough to deliver property investment and finance producing quality investment returns and be a property capital partner to the property sector.

BIG ENOUGH. SMALL ENOUGH

PrivateInvest is an Investment Fund Manager + Private Capital Partner to the Australian commercial property sector. Unlike traditional banks, we only finance projects in the property industry and with a broader range of structured property finance. We combine the best of large and small-sized financial service providers to offer investors and borrowers an investment offering similar to larger institutional financial houses, but small enough that we can keep an active eagle eye over all of our property transactions.

INVESTMENT FUND MANAGER + CAPITAL PARTNER TO THE PROPERTY SECTOR

At PrivateInvest we offer wholesale and sophisticated investors the choice of four income Funds’ which provide investors a range of income returns, income distribution frequency and liquidity. Our investors have received above industry average risk adjusted returns across all Funds, with no loss of capital or impairment in our history. We have established repeat business with our borrowers which are offered a range of structured finance solutions to meet the requirements of their project financing needs.

NATIONAL FOOTPRINT AND DIVERSIFICATION

We are big enough to have an Australian national portfolio of investment and finance providing investors and borrowers diversification by asset type, class, market location and entry timing but small enough that we have a very “hands on” approach to the business. PrivateInvest lends against property residual stock, development and construction, and site finance.

TIME IS MONEY

We are big enough to have the PrivateInvest Wholesale Funding Line which benefits our investors by lowering the risk that our Funds have excess cash reserves which dilute investment returns, while the PrivateInvest Wholesale Funding Line allows borrowers the confidence to sign finance offers that are not subject to capital raising. We are still small enough that borrowers can talk direct to the credit decision makers which improves approval times.

HIGHLY EXPERIENCED TEAM

We know property. Our specialist finance team has decades of property experience in structuring equity and debt for property transactions at leading investment firms and institutions. The combined experience extends across banking, direct development, construction, valuation and credit analysis. We are exceptionally placed to identify, assess, and work with qualified borrowers seeking finance for a range of development property projects across Australia.

GOVERNANCE AND REPORTING

Our Trustee Board has Independent Directors overseeing our highly skilled management team with additional oversight from our Investment Review Committee. PrivateInvest’s flexible risk assessment model is bolstered by our robust internal and external controls that oversee all aspects of the business including external independence, risk analysis and mitigation, regulatory compliance and backed up by institutional grade investor reporting.

The PrivateInvest Group Key Persons

Mark Roberts

GROUP EXECUTIVE CHAIRMAN, FOUNDING MANAGING DIRECTOR

Mark brings over 30 years’ property experience to PrivateInvest and its clients in both the public and private sectors.

His real estate experience includes corporate and property finance, funds management, asset management, investment management, and large-scale commercial property development.

Mark founded PrivateInvest over a decade ago, taking a measured approach to its evolution as it grew. Four years ago, Mark identified the opportunity to move into the non-bank lending sector, one of Australia’s fastest growing asset sectors which PrivateInvest has now become a genuine alternative finance solution to underserviced lenders in the commercial property market. Since that time, PrivateInvest has grown providing a range of tailored financial solutions to qualified borrowers in the real estate sector and supporting a range of significant projects and developments across Australia.

Mark has directed and executed a number of significant transactions in the finance, property and securities industries including listing an ASX entity as a major shareholder and as Managing Director. This entity became Australia’s largest in its sector, managing 5,600 rental retirement units and providing asset, facilities, tenancy, and funds management services to institutional, wholesale and retail owners.

The Roberts family private investment entity has also undertaken direct developments in the industrial, commercial, retail, hospitality and healthcare sectors.

Mark is based in Perth, Western Australia.

Nils Miller

CHIEF EXECUTIVE OFFICER, TRUSTEE BOARD MEMBER

Nils has 22 years of banking, corporate advisory, corporate finance and principal investment experience, with specific expertise in infrastructure, property, finance and funds management. Prior to Nils’ appointment as CEO of PrivateInvest, he was a consultant to the Macquarie Group. Prior to Macquarie, Nils was with Investec Australia, a dual listed entity, for over 10 years acting as an adviser, lender, investor and developer in the property and infrastructure sectors.

Nils responsibility and experience at Investec involved principal investment, asset management, oversight of institutional, strategic and investor partnerships, business development, strategic positioning and team strategy. He undertook acquisitions, capital raisings and project financings in various industries including education, affordable and social housing, health, property and property development, power, energy, correctional, student accommodation and transport. At a more granular level Nils oversaw bidding and execution of specific projects, investment strategy and structure, oversight of project development, asset optimisation activities as well as generalist team management.

Nils has held roles in advisory, strategy, origination and investment at Alba Capital Partners Limited, and as part of the Corporate Finance Team at KPMG. Prior to his appointment as CEO to PrivateInvest, Nils was a nonexecutive director of PrivateInvest for almost 4 years.

Nils holds a Bachelor of Commerce Degree from University of New South Wales, a Bachelor of Laws from Macquarie University, recently completed the University of California, Berkeley, Haas School of Business, Executive Leadership Program, and has completed the Company Directors Course at the Australia Institute of Company Directors.

Nils is based in Sydney, New South Wales.

Leon Boyatzis

DIRECTOR, FUNDS MANAGEMENT, TRUSTEE BOARD MEMBER

Leon has over 25 years’ experience in property funds management.

Leon’s background combines accounting, finance, funds management and property valuation. He has held senior property industry funds management roles for listed, unlisted, retail and wholesale funds ranging from private family offices to large multinational organisations, including Multiplex and Brookfield.

With highly valuable expertise in investment, property valuation, and finance, Leon has built a reputation for driving fund performance and exceeding benchmark investor return hurdles.

This has been achieved through, for example, the development of detailed feasibility and investment models to support valuation analysis, accounting analysis including property cashflow, and fund models to drive strategic decision making and internal valuations.

Leon has been the responsible manager for a number of responsible entities holding Australian Financial Services Licences with investment in property developments on behalf of retail and wholesale clients.

Leon is a Chartered Accountant, and a Certified Practicing Valuer with the Australian Property Institute. He holds a Bachelor of Business (majoring in Accounting and Business Law).

Leon is based in Perth, Western Australia.

Naomi Roberts

FOUNDING DIRECTOR – INVESTOR & LEGAL RELATIONS, TRUSTEE BOARD MEMBER

Naomi has over 20 years’ experience in the property and funds management industries, with significant expertise in compliance, corporate governance and legal functions.

Her real estate experience spans across working in the family private business which involved direct development of commercial, industrial, retail and residential projects.

Naomi was previously involved in an ASX-listed national affordable rental retirement management company which became Australia’s largest in its sector, providing asset, facilities, tenancy and funds management services to institutional, wholesale and retail owners.

While studying towards a Bachelor of Laws, Naomi worked in a small legal practice in Queensland which provided excellent experience across many facets of legal matters including property, financing, conveyancing, wills and estates. She relocated to Western Australia and worked in a litigation firm as an Executive Paralegal while completing her law degree.

Naomi is the Responsible Manager on the PrivateInvest Australian Financial Services Licence.

Naomi has been admitted to the Supreme Court of Western Australia (2022) and also holds a Bachelor of Business (major in Marketing).

Naomi is based in Perth, Western Australia.

Elizabeth Court

EXECUTIVE DIRECTOR, TRUSTEE BOARD MEMBER

Elizabeth has over 30 years’ banking, finance and treasury experience.

She has experience as an economist within the banking and finance industry. This background combines financial risk management, debt advisory, treasury policy together with client relationship management, corporate governance, systems, and training. Within the financial services sector, her roles have included:

■ Treasury Consultant with ANZ Bank (where she provided economic advice and analysis, financial modelling and risk management),

■ Assistant Treasurer with Colly Farms Cotton (treasury and risk management functions for Australia’s largest marketer and producer of cotton),

■ Corporate Treasury Advisor with Societe Generale (treasury risk management services), and

■ Consultant with Barrington Treasury Services (risk consulting and governance including treasury policy development, systems, and transactional banking review).

Elizabeth is the principal of Court Consultants and has recently retired her position as a Membership Director of the Private Wealth Network, an independent membership organisation of over 200 Family Offices.

In addition to her role at PrivateInvest, Elizabeth holds a Non-Executive Director position with Grey Innovation Group, a technology commercialisation company, and a Vice Chair Board position with Court Grammar School. Elizabeth is also a Member of the Board of Trustees of the Sir Frank Ledger Charitable Trust.

Elizabeth holds a Bachelor of Economics and is Member of the Australian Institute of Company Directors.

Elizabeth is based in Perth, Western Australia.

Greg Peel

NON-EXECUTIVE DIRECTOR, TRUSTEE BOARD MEMBER & CHAIR INVESTMENT REVIEW COMMITTEE

Greg has over 35 years’ experience in the banking and finance industry including corporate finance, credit and risk management, and business banking. He is highly experienced in the areas of enterprise development, funding and business modelling and partnership identification and development particularly in the area of social finance and impact investment.

He established Bendigo and Adelaide Bank’s Business and Asset Finance divisions and the Strategic Market division. Greg also co-founded and was the Chief Executive Officer and Managing Director of Community Sector Banking, a financial institution focused on not-for-profit, impact investing and social infrastructure financing.

Greg was the Director of Business Development with the New South Wales Aboriginal Land Council where he was responsible for the development of a corporatisation strategy which included enterprise and housing policy.

He has held numerous advisory roles and directorships including Australia Social Investment Trust (Executive Director), Alternative Finance Custodians (Director and Chair of Trustee), Community Sector Enterprises and Community Sector Banking (CEO and MD), Bendigo Asset Management (Chair), Social Enterprise Finance Australia (Director), Eco Trust Australia (Director), Community Development Australia (Director and Chair) and LendForGood (Advisor).

Greg has also held positions as Senior Credit Analyst, and Corporate Relationship Manager at Banque Nationale de Paris, Standard Chartered Bank and State Bank of NSW, London.

Greg holds a Bachelor of Economics.

Greg is based in Nelson Bay, New South Wales.

Peter Folland

NON-EXECUTIVE DIRECTOR, TRUSTEE BOARD MEMBER

Peter has over 35 years’ experience as a Chartered Accountant in public practice where he provided accounting and taxation advice to SME clients in a broad range of sectors.

In 2000, Peter established a commercial property syndication business and since that time he has been involved in the establishment and management of over 25 property trusts and syndicates, raised over $300 million equity, and acquired approximately 35 industrial, commercial, residential and retail properties. He has acted as trustee director and co-syndicate manager, and was involved in property management, syndicate management, and accounting and tax compliance.

He brings highly valuable property fund management expertise together with governance, financial management, and compliance experience to PrivateInvest, and plays a key role in capital raising activities as an Authorised Representative.

Peter was previously a Fellow of the Chartered Accountants in Australia and New Zealand, and holds a Bachelor of Business (Accounting).

Peter is based in Perth, Western Australia.

Sarah de Rozario FINANCE MANAGER

Sarah is a Certified Practicing Accountant and finance executive with over 20 years’ experience in the areas of business and finance, strategy, risk and compliance, process engineering and governance.

Sarah was formerly the CFO for ACE Interactive (a leading developer and supplier of turnkey IVT Systems – software and hardware), with responsibility for the planning, implementation and management of the organisation’s finance functions including planning, budgeting and forecasting, and reporting. She was also the CFO for Hockey WA and a member of the Risk and Governance Committee and was responsible for strategic planning and key initiatives with the management team, together with the assessment of organisational performance.

Prior to this, Sarah was the Global Development –Compliance and Reporting Manager for the International Cricket Council (ICC), where she was responsible for planning, managing and overseeing 93 Member countries and 5 Regional global offices, including the compliance and financial reporting for the ICC’s Developing Cricket World Funding Policy, a US$300 million program.

Previous roles included Group Reporting and Consolidation Controller at Balfour Beatty, a UK-based engineering and construction services company (where Sarah was accounting for revenues of £7.49 billion and a forward order book of £11.50 billion), Finance and Analysis Accountant at Shell (UK), and Group Finance Accountant at Mowlem, a UK-based construction and civil engineering services company and European Finance Manager at Holmes Place (a luxury brand in health, leisure and wellness industry with a turnover of £70 million).

Sarah holds a Bachelor of Business, Major in Accounting and Business Law.

Sarah is based in Perth, Western Australia.

Andy Parsons

FINANCE INVESTMENT ANALYST

Andy joined PrivateInvest in 2022, relocating from his home in Brisbane to work with PrivateInvest in Sydney.

He was previously a Lending Analyst in the Loan Origination Services team at Auswide Bank, where he was responsible for providing client services for third-party brokers. Andy supported the end-to-end lending process for loan applications, preparing credit papers for credit assessment by the credit team, completing due diligence activities, and verifying supporting financial information provided as part of home loan applications.

Andy was responsible for the management of lending applications (from origination to settlement), preparing and assessing credit submissions, resolving application and credit structuring issues for brokers, lenders and relationship managers, and completing employment verifications, credit checks and assessing valuations. He was also responsible for applying bank credit policies to satisfy the bank’s responsible lending criteria.

Andy worked as an intern with Exceed Capital while studying his degree which gained his experience in fund management and finance administration.

His responsibility with PrivateInvest is working with the loan origination team on drafting credit papers, the capital origination team on the drafting of Information Memorandums and the finance feasibility analysis with the funds management team.

Andy holds a Bachelor of Business, majoring in Finance and Economics.

Andy is based in Sydney, New South Wales.

Elizabeth Michael

EXECUTIVE SUPPORT

Elizabeth provides high-level executive support to PrivateInvest’s Directors and brings a wealth of expertise to the team. Specialising in administration, marketing, communications and event coordination, Elizabeth has worked across a diverse range of industries including finance, tertiary education, not-for-profit and mining.

Before joining PrivateInvest, Elizabeth was part of the Executive Support team for a rapidly growing national finance broking aggregator. In this role, she was responsible for providing support to the Managing Director and State based manager. She was also responsible for coordinating the marketing, communications and various projects and several national industry conference events.

Elizabeth also has extensive experience working with a family office and worked in tertiary education for many years in a variety of roles including administration, marketing, communications, lecturing, event management and human resources.

Elizabeth holds a Bachelor of Business, majoring in Marketing.

Elizabeth is based in Perth, Western Australia.

Tom Ellen INVESTMENT REVIEW COMMITTEE

Tom has extensive experience in the banking and finance sector, with expertise in the areas of credit and risk analysis, compliance and governance, process and policy reviews, change management, and identifying and implementing business performance opportunities to improve operating efficiencies and ensure compliance adherence.

Tom had over 20 years’ experience with National Australia Bank as Regional Credit Executive, Senior Credit & Risk Manager, Credit & Risk Manager, and Relationship Manager Business Banking.

He has developed comprehensive risk management templates for National Australia Banks’ Operational Risk and Compliance Team, numerous business process improvement initiatives to improve both business efficiencies and customer experiences, and change management platforms for the implementation and roll out of process improvements.

Tom has managed risk dashboard and quality assurance controls to both maintain and improve banking industry compliance functions and their implementation, leading a team of credit and risk managers to deliver leading, independently assessed Asset Quality Assurance results.

Tom holds a Bachelor of Business and Securities Institute of Australia Certificate in Financial Markets.

Tom is based in Perth, Western Australia.

Tim Jones INVESTMENT REVIEW COMMITTEE

Tim has over 27 years’ experience in property funds management, property operations, property investment and development markets throughout Australia. He is currently the principal of Wholesale Securities, a fund manager for the commercial real estate sector.

Tim was a senior executive for 15 years with the Sarich Family Office, Western Australia’s largest private property investor at the time. Tim was responsible for building the Sarich Family Office into a major property portfolio which included master planned estates and the acquisition of commercial buildings.

Prior to this, Tim’s roles included:

■ Director / State Property Manager with Macquarie Bank’s Development Funds Management team, where he was responsible for establishing various projects in direct property investment and development, with a portfolio valued in excess of $800 million.

■ Head of Funds Management with Goldmate Property Group in Sydney ,with the responsibility of establishing their property funds management business.

Tim holds a Bachelor of Business (Valuation and Economy), is an Associate with the Australian Property Institute, and is a Fellow of the Financial Services Institute of Australasia (FINSIA).

Tim is based in Perth, Western Australia.

Applying for an Investment

Applying for an Investment

The offer under this Loan Information Memorandum is for a total of 9,570,000 Units at $1.00 each.

You will need to complete the PrivateInvest Select Mortgage Trust No 2 Application Form (“Application Form”) if you wish to invest.

PrivateInvest Select Mortgage Trust No 2 Units will be issued for subscription on the date of settlement (or at the Trustee’s discretion).

If you wish to subscribe, you can fill out an Application Form. The minimum Application Amount is $100,000, although the Trustee may accept lesser amounts in its absolute discretion.

Please contact PrivateInvest on 1300 2 INVEST (1300 2 468 378) should you require a team member to guide you through the Application Form process and to ensure you qualify as a professional, or wholesale investor, or answer any questions you may have on the potential investment.

The offer will remain open and when investment is fully subscribed, a team member will contact you, or post on our website are www.privateinvest.com.au that the offer has been closed and fully subscribed.

Glossary

Glossary

$ Australian Dollars

Application Form The application form to invest in units in the PrivateInvest Select Mortgage Trust No 2 (Asquith).

Asquith Units

Units in the Trust known as PrivateInvest Select Mortgage Trust No 2 (Asquith).

Beneficiaries The Trustee, the Investment and Facility Manager and their respective directors, officers, employees, agents, advisors or representatives.

Borrower Cuda Homes Pty Ltd ACN 628 634 453 in its personal capacity (Borrower).

Corporations Act The Corporations Act 2001 (Cth).

Eligible Investor A ‘wholesale client’ as defined under the Corporations Act.

Establishment Fee The fee payable to the Investment and Facility Manager on the establishment of the Loan.

Facility Agreement The agreement between the Borrower and the Financier.

Facility Limit $11,000,000

Facility Term 18 months from Settlement of the Facility. Minimum of 16 months.

Financier PrivateInvest Select Mortgage Trust No 2 ABN 55 483 320 231.

Financial Close The time when the documentation has been executed and conditions precedent have been satisfied or waived. Drawdowns then are permissible.

GST Goods and Services Tax.

Investment and Facility Manager

Investor, Unitholder or You

PrivateInvest First Management Pty Limited (ACN 625 468 215).

A holder of Units in the Trust.

Loan

The Loan to the Borrower, secured by a first ranking registered mortgage over the Property and other guarantees.

Loan Information Memorandum Document dated 28 March 2023 outlining an investment to subscribe for a class of Units known PrivateInvest Select Mortgage Trust No 2 (Asquith).

Loan to Value Ratio

Investment and Facility Management Fee

The ratio of the loan principal exposure to the value of an asset.

The fee payable to the Investment and Facility Manager for the management of the Loan.

PrivateInvest PrivateInvest Pty Limited ACN 626 703 026 and related entities, which include the Investment and Facility Manager and the Trustee.

Secured Property (“the Site”)

Lot 1 Deposited Plan 1003285 and Lot 2 Deposited Plan 1003285.

Trust, the Trust PrivateInvest Select Mortgage Trust No 2.

Trustees PrivateInvest Capital Securities Limited (ACN 611 892 249).

Unit A unit in the Trust which is a separate class of unit attributable to a specific Loan.