Property
Brookfield>Australian Investment Platforms>Unlisted Securities>Multiplex New Zealand Property Fund (deregistered)>Enhanced Disclosure - RG 46


Enhanced Disclosure - RG 46

As at 18 June 2018

Multiplex New Zealand Property Fund

This Enhanced Disclosure is issued by Brookfield Capital Management Limited as responsible entity of the Multiplex New Zealand Property 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 4 May 2005 (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 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 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 is based on the final financial statement for the period 1 July 2017 to 12 June 2018.

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

Quick links:

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 Fund has no borrowings.

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 has no borrowings.

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

The Fund has no borrowings.

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 borrowings.

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

The Fund does not own any property assets.

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 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 and complies with a written policy on conflicts of interest and related party dealings that provides guidance to the business on the management of conflicts of interest and related party transactions, including the assessment and approval processes for such transactions. A copy of the policy is available here.

Please refer to the related party transaction disclosure note in the year end report to 30 June 2017.

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.

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 paid a final distribution of 2.1336 cents per unit on 1 June 2018. All Fund units were cancelled on 12 June 2018.

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

The Fund paid a final distribution of 2.1336 cents per unit on 1 June 2018. All Fund units were cancelled on 12 June 2018.

Net tangible assets

The NTA 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

All Fund units were cancelled on 12 June 2018. The Fund's net asset value at 12 June 2018 is zero


 

 

  
©  2018 Brookfield Australia.