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Brookfield>Australian Investment Platforms>Unlisted Securities>Multiplex Development and Opportunity Fund>Enhanced Disclosure - RG 46

NAV per unit (Audited)

As at 30 June 2018 $0.008

Enhanced Disclosure - RG 46

As at 28 August 2018

Multiplex Development and Opportunity Fund
ARSN 100 563 488

This Enhanced Disclosure Document is issued by Brookfield Capital Management Limited as responsible entity of Multiplex Development and Opportunity Fund (Fund) pursuant to ASIC Regulatory Guide 46 (RG 46): "Unlisted property schemes - improving disclosure for retail investors." The Regulatory Guide lists eight disclosure principles and six benchmarks that responsible entities of unlisted property schemes are required to apply to their upfront and ongoing disclosures for retail investors.

The Fund has applied these guidelines in accordance with the form and content stated in RG 46. Investors should be aware that previous disclosures made by the Fund reflect market standard practices which may be different to the requirements of RG 46. Investors are invited to have reference to the Fund's Product Disclosure Statement dated 14 September 2005, as supplemented on 28 July 2006 and 30 July 2008 (PDS) and other publicly released materials which are available at www.au.brookfield.com.

The responsible entity is committed to providing investors with timely and balanced disclosure of all material matters concerning the Fund in accordance with its continuous disclosure obligations, including RG 46. Key information in this Enhanced Disclosure Document and any material changes will be updated by the responsible entity as soon as practicable and in any event on at least a semi annual basis and made available at www.au.brookfield.com.

A hard copy of this Enhanced Disclosure Document is available to investors upon request by contacting Brookfield Customer Service on 1800 570 000 or by emailing clientservices@au.brookfield.com.

The information in this Enhanced Disclosure Document is based on the most recent reviewed financial statements available for the Fund, being for the period ended 30 June 2018. The responsible entity is not aware of any material changes since those statements.

The table below contains an overview of ASIC's description of the eight disclosure principles, the responses of the Fund's responsible entity to those key risk features and then the practical application of each of the eight disclosure principles to the Fund.

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Risk Feature What this means
Gearing

This indicates the extent to which the Fund's assets are funded by external liabilities. RG 46 defines gearing ratio as total interest bearing liabilities divided by total assets.

ASIC's description of this key risk states that "a higher gearing ratio means a higher reliance on external liabilities (primarily borrowings) to fund assets. This exposes the scheme to increased funding costs if interest rates rise. A highly geared scheme has a lower asset buffer to rely upon in times of financial stress."

The gearing ratio represents the percentage of debt compared to the gross assets of the Fund. The gearing ratio can help investors assess risks. It shows how much the Fund owes in debt to its financiers as a proportion of what the Fund owns (assets).

The Fund's Response and Practical Application of the Disclosure Principle and benchmark

The Consolidated Entity of the Fund (the Fund) includes the Fund and its subsidiaries. As per the PDS there are no borrowings at the Fund level. Borrowings may be made by subsidiaries of the Fund, or other vehicles in which the Fund has invested. Such borrowings do not have recourse to other assets of the Fund, only to the assets of that particular entity.

As at 30 June 2018, the scheme's gearing ratio is nil, and the look-through gearing is also nil.


The Fund does not have any gearing at an individual credit facility level, therefore, the responsible entity does not maintain a written policy on gearing.

Interest cover

This indicates the Fund's ability to meet interest payments from earnings. RG 46 defines interest cover ratio as (EBITDA1 minus unrealised gains plus unrealised losses) divided by interest expense.

ASIC's description of this key risk states that "interest cover is a key indicator of financial health. The lower the interest cover, the higher the risk that the scheme will not be able to meet its interest payments. A scheme with a low interest cover only needs a small reduction in earnings (or a small increase in interest rates or other expenses) to be unable to meet its interest payments."

The Fund's Response and Practical Application of the Disclosure Principle and benchmark

The Fund does not have an interest cover ratio policy because the calculation of the ratio is not applicable to development projects. The Fund does not have any interest bearing liabilities on balance sheet or off balance sheet.

 

Interest capitalisation

This relates to whether or not the interest expense of the scheme is capitalised

ASIC’s description of this key risk states that “ when a scheme capitalises interest expense, it is important for investors to understand how the scheme will meet its interest obligations when deciding whether to invest in the scheme”.

The Fund's Response and Practical Application of the Disclosure benchmark No interest is being capitalised at the Fund level. The Fund invests in development projects where project debt is used to fund the project. Interest cost incurred at the project level is capitalised into the project in accordance with the accounting standards.

 

Scheme borrowing

This relates to the Fund's borrowing maturity and credit facility expiry and any associated risks

ASIC's description of this key risk states that "relatively short-term borrowings and credit facilities with short expiry dates are a risk factor if they are used to fund assets intended to be held long term. If the scheme has a significant proportion of its borrowings that mature within a short timeframe, it will need to refinance. There is a risk that the refinancing will be on less favourable terms or not available at all. If the fund cannot refinance, it may need to sell assets on a forced sale basis with the risk that it may realise a capital loss. Breach of a loan covenant may result in penalties being applied, or the loan becoming repayable immediately. This means that the fund may need to refinance on less favourable terms or sell assets. Termination of critical financing could also mean the scheme is no longer viable."

The Fund's Response and Practical Application of the Disclosure Principle

The Fund has no interest bearing liabilities and off balance sheet financing.


 

Portfolio diversification

This information addresses the Fund's investment practices and direct property investment portfolio risk

ASIC's description of this key risk states that "generally, the more diversified a portfolio is, the lower the risk that an adverse event affecting one property or one lease will put the overall portfolio at risk."

The Fund's Response and Practical Application of the Disclosure Principles

In prior periods the Fund fully settled its final development property project (Little Bay South). The Fund is currently in the process of completing defects at Little Bay South Stage 2. 

As at 30 June 2018, the Fund has no active development. 

 

Valuation of real property

This relates to the responsible entity's approach to valuing real property.

ASIC’s description of this key risk states that “Investors should be able to understand and compare how responsible entities value their … real property assets ..(to) assess the reliability of the valuations”.

The Fund's Response and Practical Application of the Disclosure benchmark

The Brookfield Australia Investments Group maintains and complies with a written valuation policy that requires Australian Valuation Reports comply with the current Australian and New Zealand Property Institute Valuation Practice Standards ("ANZ VPS") and International Valuation Standards (IVS"). The Policy is currently being updated to include procedures to be followed for dealing with any conflicts of interest; the rotation and diversity of valuers and a timetable for when, an independent valuation is to be obtained.  A copy of the Valuation Policy is available here.

As a development fund property within the Fund is valued on an 'as is' and 'as if complete ' basis

 As at 30 June 2018 the Fund does not own any property assets.

Related party transactions

This relates to the responsible entity's approach to related party transactions

ASIC's description of this key risk states that "a conflict of interest may arise when property schemes invest in, make loans or provide guarantees to related parties."

The Fund's Response and Practical Application of the Disclosure Principle and benchmark

The responsible entity maintains a conflicts of interest policy that provides guidance to the business on the management of conflicts of interest and related party transactions. A copy of the policy is available here. Importantly, a decision about whether the Fund will invest into a Brookfield Multiplex Development may only be made with the approval of all the independent directors of the responsible entity.

Please refer to the related party transaction disclosure note in the full year financial statements to 30 June 2018. The Capped Liquidity Facility offered by the responsible entity to acquire units from unitholders seeking to exit the Fund reached its limit of $20 million in June 2008. This was disclosed in the year end 2008 Financial Statements. 

The responsible entity manages related party transactions and conflicts of interest issues through the application of its governance arrangements, which include board consideration and approval of all investment related transactions. All related party transactions are scrutinised by the responsible entity to ensure compliance with Chapter 2E of the Corporations Act.

The responsible entity maintains and complies with a written policy on conflicts of interest and related party dealings, including the assessment and approval processes for such transactions. A copy of the Conflict of Interest and Related Party Dealings Policy is available here.

 

Distributions

This relates to information on the Fund's distribution practices.

ASIC's description of this key risk states that "some property schemes make distributions partly or wholly from unrealised revaluation gains and/or capital rather than solely from realised income. This may not be commercially sustainable over the longer term, particularly where property values are not increasing."

The Fund's Response and Practical Application of the Disclosure Principle and benchmark

The Fund's future distribution payments will mostly of capital. When the underlying investments in the Fund are realised the capital component will be returned. The return of capital would be funded from cash from operations. The forecast capital distributions are sustainable to the extent that there is capital to be repaid.

 

Withdrawal rights

This relates to investors' withdrawal rights from the Fund

ASIC's description of this key risk states that "unlisted property schemes often have limited or no withdrawal rights. This means they are usually difficult to exit."

The Fund's Response and Practical Application of the Disclosure Principle

As communicated on 29 October 2008 the Fund is closed to new investments and the Liquidity Facility Limit of $20.0 million offered by the responsible entity to acquire units from Unitholders' seeking to exit the Fund was reached at 30 June 2008. The Fund is progressively returning capital to investors, wind up of the Fund will proceed and the final distribution will be made once commercial matters relating to the Little Bay South development has been resolved.

 

Net tangible assets

The NAV calculation helps investors understand the value of the assets upon which the value of their unit is determined”.

ASIC's description of this key risk states that “Open-end schemes regularly disclose the NTA for the scheme or a similar measure such as net asset backing or net asset value to support the pricing of units in the scheme. These measures are not generally disclosed for closed-end schemes”.

The Fund's Response and Practical Application of the Disclosure Principles

The net asset value of the Fund as at 30 June 2018 is calculated to be $0.008. This is based on the most recent audited financial statements available for the Fund, being the period ended 30 June 2018. The NAV of the Fund is calculated using the net assets values of the Fund divided by the total number of units issued as at 30 June 2018. The NAV represents the value of the net assets of the Fund at 30 June 2018. The NAV is not a representation of what an investor would ultimately realised if the Fund was to wind up.

 

 

 

Interests in Multiplex Development and Opportunity Fund ARSN 100563488 (Fund) are issued by Brookfield Capital Management Limited ACN 094 936 866 (AFSL 223 809), the responsible entity of the Fund. A Product Disclosure Statement (PDS) for the Fund dated 14 September 2005, as supplemented on 28 July 2006 and 30 July 2008 is available which details the terms of the offer as well as the various assumptions on which forecast financial information is based. Investors who wish to acquire (or continue to hold) an interest in the Fund should first read and consider the PDS and seek their own advice before making any decision about whether to invest. The PDS may be viewed online at www.brookfieldmultiplexcapital.com. A paper copy of the PDS is available free of charge to any person in Australia by telephoning 1800 570 000. Applications must be made by completing the application form in or accompanying the PDS. This notice is not intended as personal advice and has been prepared without taking account of any investor's investment objectives, financial situation or needs. For that reason, an investor should, before acting on this advice, consider the appropriateness of the advice, having regard to their investment objectives, financial situation and needs. Past performance is no indication of likely future performance. Every effort has been made to ensure the accuracy of the financial information herein but it may be based on unaudited figures. This document contains forward looking statements. You should be aware that such statements are only predictions and are subject to inherent risks and uncertainties. Those risks and uncertainties include factors and risks specific to the property industry as well as matters such as general economic conditions and conditions in financial markets. Actual events or results may differ materially from the events or results expressed or implied in any forward looking statement and such deviations are both normal and to be expected. The responsible entity does not make any representation or warranty (either express or implied) as to the accuracy or likelihood of fulfilment of any forward looking statement, or any events or results expressed or implied in any forward looking statement. You are cautioned not to place undue reliance on these statements. The forward looking statements in this document reflects the views held only as at the date of this document.


 

 

  
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