australian Real estate OppORtunities Fund introduction

strong demand for residential real estate in australia

Pipeline of quality projects generating abnormally high returns

Highly experienced and successful inhouse real estate teamDRAF

T

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Welcome

Fund trustee & Manager

moss capital Pty limitedaBn: 25 135 588 224aFsl: 337917www.mosscapital.com.au

Registered Office level 26135 King stsydney nsW 2000

Fund administration address moss capital real estate opportunities FundGPo Box 1511 sydney, nsW 2001

t: +61 (2) 9239 8400F: +61 (2) 9239 8411e: funds@mosscapital.com.au

investor Relations Contact marianne ossovanimoss capitalt: +61 (2) 9239 8400m: +61 (0) 439 002 656e: marianne.ossovani@mosscapital.com.au

auditor of the Manager

deloitte touche tohmatsuGrosvenor Place 225 George streetsydney nsW 2000

moss capital is a leading australian fund manager and capital advisor specialising in real estate opportunities.

the moss capital team consists of a number of australia’s leading finance and investment banking professionals who have been involved in some of the country’s most significant listed and unlisted funds, capital market transactions and independent advisory roles for foreign and domestic clients.

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important notice

this document introduces the moss capital real estate opportunities Fund as an investment proposition. this document is not an offer to invest. all parties considering an investment in the moss capital real estate opportunities Fund must read the information memorandum and complete the application form therein attached.

the Fund is only open to Wholesale and sophisticated investors as defined under sections 761G and 761Ga of the australian corporations act, 2001, and is not a registered managed investment scheme under the act.

interested Wholesale and sophisticated investors should contact moss capital (details inside cover) and request a copy of our detailed information memorandum, which includes the investment application form.

the information presented in this document is current as of october 2010.

tHe oPPortunity PaGe 5

WinninG strateGy PaGe 6

tHe australian real estate marKet PaGe 7

exPert manaGement team PaGe 12

tHe moss caPital aPProacH to real estate develoPment PaGe 14

contacts PaGe 15

indeX

QualitY Real estate OppORtunitY

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the australian economy is characterised by strong economic growth from mining, agriculture and tourism. it has the world’s most transparent real estate market1 with positive fundamentals driven by population growth and economic development.

there is an acute shortage of real estate development capital in the australian market. Whilst australia is the only Western economy not to have had a recession during the Global Financial crisis of 2008-2010, the foreign banks which were active lenders in the australian market have curtailed their australian lending operations. Furthermore, the four major commercial banks in australia have tightened their lending policies significantly. Whilst large developers can fund their own projects, investment opportunities in projects under $50 million (traditionally undertaken by smaller developers) have become available due to the prevailing shortage of development capital.

these factors combine to create a unique investment opportunity to generate abnormally high investment returns.

tHe OppORtunitY

target Returns1 25% iRR2

target Fund size $200 million of investor commitments.3

distributions distributions of income and capital will be made upon realisation of each project

structure australian closed ended, unlisted unregistered unit trust

Fund description a growth focused fund which invests predominantly in opportunistic real estate development projects offering high rates of return in strong market sectors

investment policy the Fund will invest in a range of projects that offer high returns to investors. the Fund will target investments between $2 million and $20 million with a project profit on cost of 30% and an equity irr of greater than 25%

investment strategy residential developments in areas of strong economic growth, including land subdivision, medium density and high rise apartments

investment timeframe 5-year closed fund, which may be extended by up to 2 years with requisite investor approval

investor profile Wholesale clients and sophisticated investors

Fund Fees establishment Fee 2.0% of the funds invested establishment management Fee2.0% of the funds invested Performance Fee above 20% of gross fund return, net of fees costs, a hurdle rate of 15% irr (pre-tax) on drawn equity

Moss Capital services moss capital or its associates may earn market based fees, including performance fees, for providing development, project management and related services to the projects in which the Fund invests

1 refer Highly transparent markets. source: Jones lang lasalle, lasalle investment management2 this is a target only. it is not an estimate or forecast of the returns which will be achieved by the Fund. the target is stated after fees and expenses and before the impact of taxation on the investor’s return. investor returns on investment in the Fund are not guaranteed.3 the Fund is able to accept over subscriptions. the Fund may proceed to a ‘soft close’, once a minimum subscription of $25m has been achieved.

Key Fund summary

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WinninG stRateGY

shortage of development capital

tightened lending criteria of the four major australian commercial banks

opportunity to invest in projects that deliver abnormally high returns

moss capital real estate opportunity Fund

expert management team

Growing population

strong economic fundamentals of australian economy

shortage in supply of residential stock

strong returns

Quality residential development opportunities

Capital and expertise

strong demand

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2010Composite Rank

Market 2010Composite score

1 australia 1.22

2 canada 1.23

3 united Kingdom 1.24

4 new Zealand 1.25

5 sweden 1.25

6 united states 1.25

7 ireland 1.27

8 France 1.28

9 netherlands 1.38

10 Germany 1.38

11 Belgium 1.46

12 denmark 1.50

the australian economy continues to enjoy strong growth from mining, agriculture and tourism. the australian real estate market is well regulated and is the world’s most transparent.

source: Jones lang lasalle, lasalle investment management

tHe austRalian Real estate MaRKet

the World’s Most transparent Real estate Market

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shortfall in supply

there is strong demand for residential land, houses and home units.

the demand for completed residential property is very strong. Both owner/occupier and private investors are active in most australian residential markets and first mortgage finance is available for home buyers.

Whilst recent interest rate rises in australia have tempered residential demand, the underlying shortfall in supply prevails. this prevailing shortfall in supply is due to the lack of development projects undertaken in the last two years. Furthermore, supply is not improving as banks seek to limit their real estate lending exposures outside of residential mortgage lending.

the graph below shows the significant forecasted shortage for property on australia’s eastern seaboard.

shortfall in property supply

tHe austRalian Real estate MaRKet (continued)

-120,000

-70,000

-20,0002001-2005 2006 2011 2016 2021 2026

30,000

80,000

inadequate supply

adequate supply

source: residential development council australia

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lack of Competitive lending

australia’s four major commercial banks have come through the Global Financial crisis of 2008-2010 in an exceptionally strong fiscal position.

aPra, the australian banking regulator, has enforced tight controls over lending policies, in particular with regard to bank lending for real estate (and especially real estate development projects).

also, the european, american, south african and asian banks that were active in the australian market before the GFc have largely closed their lending operations in australia.

Major funding gaps:

1. tightened lending criteria; lvrs substantially reduced

2. mezzanine debt has largely disappeared and is very expensive

3. developers’ new projects have been restricted by prevailing bank lending policies

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Opportunities are in the small to medium size segment

large property developers are readily able to access bank funding, but smaller developers do not have such access to debt facilities.

investment opportunities in development projects with a value of less than $50 million (which do not appeal to the large development companies) have emerged as smaller developers experience difficulty in obtaining finance.

these factors combine to present an opportunity to exploit the current market dislocation caused by the current lack of debt finance.

sectors for developers seeking Finance

source: davis langdon access to Finance research report July 2010

%

0 10 20 30 40 50

Residential

Industrial

Office

Aged Care

Tourism

Retail

difficulty of access to Finance by sector

source: davis langdon access to Finance research report July 2010

Retirement & Aged Care

%

0 20 40 60 80 100

Residential

Tourism

Office

Retail

IndustrialEasy

Average

Difficult

tHe austRalian Real estate MaRKet (continued)

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%

6 m

onth

s 12

mon

ths 18

m

onth

s

24

mon

ths

24

>mon

ths

35

30

25

20

15

10

5

0

expert Real estate team

moss capital is exceptionally well positioned to source residential development projects in strong growth areas. Projects currently under control by moss capital are forecast to achieve project internal rates of return in excess of 35%.

moss capital has the people and skills to deliver projects that generate abnormal returns in what we believe to be a significant real estate market anomaly in this country.

the Opportunity is now

Prevailing australian credit market dynamics present a compelling window of opportunity for the establishment of this Fund. Both developers and financiers believe that access to development capital for real estate projects will not improve in the short term.

the chart below indicates that the majority of developers and financiers believe credit restrictions will not ease within the next 18 to 24 months. approximately 20% believe credit restrictions will persist beyond 2-years.

Developers

Financiers

source: davis langdon access to Finance research report July 2010

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the moss capital team consists of a number of australia’s leading finance and investment banking professionals who have been involved in some of the country’s most significant listed and unlisted real estate funds.

Key members of the team include:

Bill Moss Chairman

Bill moss am is an australian businessman and philanthropist with over 30 years experience in real estate, banking, funds and asset management. Bill spent 23 years as a senior executive and executive director with macquarie Group, the pre-eminent australian investment bank, where he founded, grew and led macquarie real estate Group to a point where it managed over $23 billion worth of investments around the world.

Glenn Willis Chief Executive Officer

Glenn has 25-years experience in investment banking with specific expertise in fixed income, debt origination, structured finance and funds management. Glenn was the founder and managing director of Grange securities and later became ceo and vice chairman of lehman Brothers australia. He previously held the positions of Head of Fixed interest and debt capital markets at Fay richwhite and Head of securities trading at challenge Bank.

ian Williams Executive Director

ian has over 24 years investment banking experience focused in real estate, finance and investment. He has expertise in raising both debt and equity for businesses and for projects, has a strong understanding of board audit and compliance procedures and prudential control of business operations. He was director of Business operations for urban Pacific ltd, with responsibility for 29 development projects across australia, south africa and the usa. He was responsible for the formation of macquarie Bank’s property syndication business, raising over $750 million for syndications and funds.

eXpeRt ManaGeMent teaM

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Michael Baliva Executive Director

michael brings a wealth of australian and international real estate and fund experience to moss capital, having spent the last 5 years in the us and european real estate markets. in addition to his 8 years as a chartered accountant focused on property and financial services, michael has 13 years real estate investment experience with australian listed property fund and asset managers specialising in retail property. most recently, michael headed up centro Properties’ national us investment/asset management capability, comprising 350 people managing 235 properties valued at us$6.4 billion.

Rodney pryor Executive Director

rodney is a chartered Financial analyst with more than 13 years experience in the financial services industry, specialising in debt financing and restructure, credit and financial analysis, and risk assessment. Prior to being lehman Brother’s australian lead credit analyst, rodney was director of credit research at Grange securities, before which he was an accountant at Pricewaterhousecoopers.

KK lim Director

KK lim has almost 30 years international experience in senior management roles across asia, europe and australia. during this time KK held positions with standard chartered Bank, Hastings-deering Group, aBn-amro, national Westminster Bank and was managing director - asia of macquarie Bank’s Property Group for 6 years. in 1993, KK pioneered macquarie Bank’s entry into china, successfully leading the team that set up the first foreign managed fund to directly invest into chinese residential real estate.

todd perry Director, Developments

todd has strong property development experience. throughout the last decade todd has been responsible for the delivery of many significant development projects. He also has wide experience across a variety of property management tasks, including leasing, acquisition and disposal, property valuation and project management. todd holds a degree in business with majors in Property and valuation and a diploma in Government (Project management). todd is an accredited professional with the Green Building council of australia.

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tHe MOss Capital appROaCH tO Real estate develOpMent

step 1: strict investment CriteriaFund investments in individual projects will be required to satisfy the following criteria:

investment between $2 and $20 million

maximum investment of 20% of total Fund’s investment pool

minimum project profit on development cost of 30%

minimum equity irr of 25% p.a.

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step 4: project deliverymoss capital’s team has substantial experience in establishing development project management controls to deliver project objectives through:

implementing financial controls to protect investment capital

ensuring project management systems are robust

oversight of every stage:

• design, planning, construction and sales and marketing

rigorous monitoring of the performance of all project partners, contractors and consultants

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step 2: Rigorous investment analysismoss capital’s highly experienced real estate investment team has a strong track record in:

analyzing investment opportunities

undertaking commercial evaluation and due diligence investigations including

• identifying opportunities in low risk, high growth market sectors

• selecting experienced and appropriate development partners and contractors

• evaluating opportunities to ensure they generate minimum return targets

• ensuring clearly defined exit strategy alternatives are established for each project

only those projects that meet these strict investment criteria will be recommended to the investment committee.

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step 3: Risk assessment and Mitigationreal estate development projects are subject to risk. the ability to assess and mitigate

risk determines the level of success of real estate projects

optimal risk management and mitigation is achieved by astute project selection, rigorous investment analysis, comprehensive project risk assessment and the establishment of clear strategies to manage and minimise risks

risk assessment and mitigation strategies are implemented prior to investing in a project. once the investment is made, mitigation strategies are updated to reflect changing market conditions

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moss capital has a risk averse approach to real estate investing.

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COntaCts

interested Wholesale clients and sophisticated investors can contact moss capital for a copy of the moss capital real estate opportunities Fund detailed information memorandum, which includes the investment application form.

Contacts

ian Williams michael Baliva KK lim Executive Director Executive Director Director

t: +61 (0) 2 9239 8400 t: +61 (0) 2 9239 8400 t: +61 (0) 2 9239 8400

address

moss capital real estate opportunities Fund level 26, 135 King st sydney nsW 2000

GPo Box 1511 sydney nsW 2001 (c) 2010 moss capital Pty limited

this document is not an offer to invest.

the information contained in this document is not exhaustive of information relating to the Fund. this document is not and is not required to comply with the content provisions of a Product disclosure statement or Prospectus under the corporations act 2001 (cwth).

this publication contains information in summary form and is therefore intended for general guidance only. it is not intended to be a substitute for detailed research or the exercise of professional judgment. neither moss capital Pty limited or nor any other member of the moss capital organisation can accept any responsibility for loss occasioned to any person acting or refraining from action as a result of any material in this publication. on any specific matter, reference should be made to the appropriate advisor.

(c) 2010 moss capital Pty limited

all rights reserved

aBOut MOss Capital

moss capital is a leading australian fund manager and capital advisor specialising in energy, natural resources and real estate.

the moss capital team consists of a number of australia’s leading finance and investment banking professionals who have been involved in some of the country’s most significant listed and unlisted funds, capital market transactions and independent advisory roles for foreign and domestic clients.

MOss Capital Real estate OppORtunitY teaM (COntaCts)

ian Williams Michael Baliva KK lim executive director executive director directort: +61 (0) 2 9239 8400 t: +61 (0) 2 9239 8400 t: +61 (0) 2 9239 8400