THE PROPERTY

The property is known as The Octagon and comprises a three level commercial office building providing 3042 m² of lettable space on a large 4058 m² site together with 86 on-site carparks, located in the heart of the Henderson CBD, the commercial centre of Waitakere City.

The property is octagonal in shape and provides three levels of office accommodation with good natural light, well laid out around a central service core. The property has over recent years undergone a full refurbishment programme including:

• Upgraded entry foyer

• New lift

• New toilets on the ground floor

• New air-conditioning system

• Repainted exterior

• Window re-sealing

• Extensive external landscaping

The construction of the building is of reinforced concrete column and beam structural frame with the exterior cladding being a tinted glass curtain wall retained by aluminium window frames. The roof comprises longrun galvanised steel. The service core comprises the lift entry, stairwell and separate male and female bathrooms.

The building comprises a mixture of typical commercial accommodation with the Landlord providing the carpet, suspended ceiling tiles, lighting and air-conditioning.

We have had specialist reports carried out on the roof, air-conditioning and the lift. We are pleased to say that apart from minor repairs to some areas on the roof which will be carried out in due course, those items are in good order.

LOCATION

The property lies on the northern side of Alderman Drive, close to its intersection with Great North Road and Henderson Valley Road, and as such forms part of the commercial/retail core of Waitakere City.

The immediate area is a mixed commercial locality predominantly characterised by medium to low rise office buildings as well as other service commercial occupiers together with a Pak `n` Save supermarket to the immediate east. To the south-east along Ratanui Street are a number of medium rise office buildings including premises occupied by Unitec and Henderson District Court as well as a recently constructed new Civic Centre and Library. Great North Road provides strip retail tenancies and the popular Westfield’s West City Shopping Town.

Henderson would be regarded as the commercial centre of Waitakere City and is well serviced by main vehicular thoroughfares leading to all areas of the city with motorway on/off ramps nearby.

There is no doubt that the popularity of the property with its occupants is partially driven by its close proximity to the Henderson District Court. We understand that the Council are considering a relocation of the Court to a site behind the subject premises, which would only add to the popularity of 6 Alderman Drive as a destination for those tenants who rely on the Court being nearby.

SITE

The site is freehold and is subject to four encumbrances and a lease over part of the parking area:

1. A right of way and parking rights in favour of the Henderson Borough Council (now Waitakere City Council) over part of the site.

2. An easement grants in favour of Lot 4 (6 Alderman Drive) a right of way over part of the adjacent site.

3. A memorandum of encumbrance providing that the proprietor of Lot 4 (Alderman Drive) is required to provide a sufficient quantity of carparking to comply with Henderson Borough Council’s ordinances for the commercial Zone.

4. An easement in favour of what was then Waitemata Electric Power Board over part of the site.

5. Twenty one of the eighty six carparks are held by way of a lease for a term of four years from 1^st May 2008 at a rental of $13,650 per annum, with 3 x 4 yearly Rights of Renewal providing an expiry date of 30^th April 2024. It should be noted that the rent paid for these carparks is recovered in full from subletting all twenty one parks to the current tenants.

In the opinion of the offeror, none of these encumbrances have a detrimental effect on the property.

THE LEASES

The property is fully leased with terms ranging from five years to short term, with a good spread of Crown, multi-national and professional tenants as shown on the attached tenancy schedule:

THE TENANTS

Public Trust

Public Trust is a crown owned entity that provides wills and estate administration services. (http://www.publictrust.co.nz/)

Legal Services Agency

Legal Services Agency is a crown owned entity established to provide legal aid to people who cannot afford legal services. (http://www.lsa.govt.nz/index.php)

Jespersen

Jespersens Solicitors have recently renewed their lease, earlier than the expiry date, and their new six year lease will run from 30^th September 2010 at a slightly improved rental - $26,603 pa which is an additional $3,862 pa, representing a 17% increase. This agreement shows the popularity of the building for the legal profession.

TBI Health

TBI Health is a new tenant who signed a new four year lease commencing 1^st February 2010. They provide physiotherapy treatment and rehabilitation for backs and related injuries. They have another clinic in Greenlane, Auckland and a head office and five clinics in Wellington. (http://www.tbihealth.co.nz/)

SCA Hygiene

SCA Hygiene occupies the entire first floor and is a large multi-national company which operates in over sixty countries with a turnover of 11.4bn euros. They manufacture toilet paper, tissues, personal hygiene products as well as a number of other related activities. They took over Carter Holt’s NZ operation, which had been in the building for many years. (http://www.sca.com/)

Askelund

Private barrister’s chambers

Family Planning

A government agency (http://www.familyplanning.org.nz/)

Teeco Pak Trade

A private import/export business

Bridie Murphy

Private barrister’s chambers

THE SCHEME

The scheme enables investors to purchase an undivided share in the whole property with each investor’s share being registered in the share register.

In Auckland, Property Managers Syndications Limited has syndicated large properties such as 5 Short Street, Newmarket (eight level office tower), 21 Hobill Avenue, Wiri (large industrial property) and 2 Robert Street, Ellerslie (Mixed Office and Retail) in recent years.

The form of shared ownership enables investors to participate in the better properties and spread their investment over several properties. There are no pre-emptive rights in the schemes administered by Property Managers Limited, which simply means that owners are under no obligation to sell back to the group and can sell or deal with their share as they see fit.

The owners appoint Property Managers Limited as the Manager and must enter into the Management Agreement with respect to the property, known as the Terms and Conditions of Ownership.

The scheme is suitable for passive investors as the Manager has the authority to deal with the day-to-day operation of the property and the scheme.

PROPERTY MANAGERS LIMITED

The company was formed in 1992 by Denis McMahon in response to the perceived need for an independent, professional service dedicated solely to the commercial property sector.

The Company grew quickly based upon a philosophy of personal, professional service and quickly added syndication to its core business to meet the demand from satisfied clients for well-managed investments.

The Company has an enviable track record in terms of the performance of properties under its management over the last decade and, in response to demand from clients satisfied with the Company’s management performance, formed a sister company Property Managers Syndications Limited, to syndicate suitable properties to its client base.

The first such property was syndicated in 1994 in Tauranga and today is still producing a double digit return to the original investors (This doesn’t take into account the capital return).

The Company has syndicated twenty-three properties over the last sixteen years.

The Company’s independence enables it to effectively network with all of the leading Real Estate Firms in terms of sourcing new tenants and obtaining market information used in the day to day management of the properties.

Whilst the Company has enjoyed steady growth it has not lost sight of the goal of personal, professional service and the idea of being in partnership with tenants.

This philosophy and the people applying it are the keys to both the historical and the future success of Property Managers Limited.

Property Managers has now decided to open up an Auckland office to not only search for suitable properties to syndicate from the much larger Auckland commercial property market but also to attract new investors from the Greater Auckland area. In addition, an Auckland office will assist in the day to day management of the properties and the relationships with all the tenants, which Property Managers prides itself upon.

The Auckland operation will be formally known as Property Managers (No.2) Ltd and will be owned by Denis McMahon and Philip Tushingham MRICS who has over thirty years of experience in the commercial property market both in the United Kingdom and New Zealand.

FINANCIAL INFORMATION

The Investment Group is treated as a joint venture from the Inland Revenue Department’s point of view. The Investment Group is registered for GST purposes. Individual investors do not have to be registered for GST. All GST is accounted for and paid by the Manager from the Investment Group’s Bank Account each month.

INVESTORS DISTRIBUTIONS

Investors Distributions are in effect treated as owner’s drawings. There is no GST included in the distribution and there is no income tax deducted.

The investors receive 80% of their return by way of automatic payment each month to their nominated bank account. Each quarter, a financial reconciliation is carried out with investors receiving a financial report, an update of any relevant developments on the property and a direct credit to their bank account for the balance of the return.

The withholding of the 20% simply enables the manager to pay bills as they fall due before being recovered from the tenants where this is provided for in the lease.

ANNUAL ACCOUNTS

A set of Annual Financial accounts is provided to each investor showing their share of the profit for the year to include in their personal tax returns. These accounts will be audited annually by an external independent accounting firm on behalf of the investment group.

MARKET COMMENT

There is no doubt that the global financial crisis has had an effect on the commercial property market in New Zealand. Liquidity problems, and the tightening of lending criteria by all financial institutions have put pressure on capital values, whilst the leasing market has been as difficult as any in the last twenty-five years as company profitability has come under close scrutiny.

Businesses have been focusing on their property occupation costs in a much more aggressive manner which means it is more crucial than ever to own property with good fundamentals which are location, generic/flexible, of good construction, in good condition and let to strong companies.

There has been a widening of the gap between the capitalisation rates of quality commercial property investments and those of a more secondary nature. Those properties showing all the above qualities are still in demand from well-funded property investors of which there are still many in New Zealand. However those properties which have one or all of the key components missing, will struggle to sell in today’s investment market.

Yields for quality properties have certainly increased from the height of the market however not by as much as many commentators were anticipating. This is primarily due to cheaper funding costs from the OCR being at historically low levels, and investors requiring a little more yield than those currently being offered by bank deposit rates .

SUMMARY

As mentioned above, all property which we offer for syndication has to meet the key criteria in terms of being quality, well-located buildings, in good condition and let to strong tenants. We believe that 6 Alderman Drive offers all those qualities and we anticipate that with a net return of 7.75%, there will be strong demand for the shares.

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DISCLAIMER

This report has been prepared solely for information purposes in order to assist interested parties in making their evaluation of 6 Alderman Drive, Waitakere City and does not purport to contain all the information that a prospective purchaser may require. In all cases interested parties should conduct their own investigations and analysis of the data set out in this report.

Property Managers Realty Limited and/or the Vendor are not to be held responsible in contract tort or in any other way for inaccuracy in, omission from or other defect of whatever kind, contained in this report and the recipient waives any rights which it might now or in the future have against Property Managers Realty Limited or the Vendor.

Interested parties are requested to contact the Sole Agent for further information.