Unlisted property trusts - Mirvac Development Fund – Seascapes

(i) Overview of the specific vehicle
The Mirvac Group which is listed on the Australian Stock Exchange was established in 1972 as a real estate group. It has two main divisions, Investment and Development. The Development Group undertakes development and construction projects, one of which is the Mirvac development Fund – Seascapes.
The Mirvac Development Fund – Seascapes is a single project fund which is a close-end unlisted project. The project was established in November 2005, to acquire, develop and sell Stages 17 - 27 of the Seascapes Estate.
Seascape is located in Mandurah, Western Australia, approximately 75Km south of Perth. The project involves: * Fund was constituted on the 15th of October 2005 * Development and sale of 11 stages * Development of a 48 hectare parcel of land * Development of 528 residential lots, including grouped housing site * Directors of Mirvac Funds Management Limited is the responsible persons of the Mirvac Development Fund - Seascapes * Managed by Mirvac Western Australia. Including the development and sale stages of the project.

(ii) Details & current value of the property portfolio
The property consists of the development of 528 residential lots on a 48 hectare parcel of Land. The land overlooks the Indian Ocean foreshore, which is an added incentive for buyers. Both tourist and locals alike flock to the area for its famous beaches and clean waterways.
As of December 2009, the property development site stages 25 to 27 were valued at 14.5 million Australian Dollars.
The following is the value of the property portfolio from the Balance sheet as at the 31st December 2009.

(Source: Mirvac Development Fund – Seascapes Interim financial report for the half year ended 31 December 2009)

(iii) Diversification of the property portfolio
The Mirvac Group are very well diversified, with over 1,488,924 sqm of property across Australia and the United States of America (Mirvac Property Compendium 30 June 2010). This includes 46 hotel properties in Australia and New Zealand, making it one of the largest Australian-owned hotel groups.
The following illustrates the level of diversification the Mirvac Group holds.

(Source: Mirvac Property Compendium 30 June 2010)
The Mirvac Development Fund – Seascapes in itself is not georgraphical diversified. It consists of one property portfolio located in one area of Western Australia, Mandurah. This includes a total of 530 lots across a 48 hectares of land.

(v) Recent performance & future outlook of specific vehicle
Recent Performance
In the quarter to the 31st of March 2010, 18 contracts were exchanged, with 18 contracts settlement achieved. In the nine months to the 31st of March 2010 a total of 36 contracts were signed, totalling $8.0 million.
The fund has a debt limit of $11.5 million, however only $4.4 million have been utilised. The gearing ratio, which is a ratio of debt to equity was 35% as of the 31st of March 2010.
As of 31st March 2010 a total of 320 lots have been settled, with a total of 143 lots are scheduled to commence construction on. The following illustrates the number of lots completed, sold and planned.

(Source: Mirvac Development Fund — Seascapes March 2010 Quarterly Update pg 1)
Actual cash proceeds from the sale of lots in the six months to 31st of December of 2009 was $4.506 million, a rise of 284% from the same period of 2008, $1.174 million. The cost of sales as illustrated in the Income Statement was $2.971 million in the six months to 31st December 2009, up from $1.444 million in the same period of 2008.
The financial performance in the quarter ending 31st of March 2010 is as follows:

(Source: Mirvac Development Fund — Seascapes March 2010 Quarterly Update pg 2)
In total, 73% has been constructed with a total of 88% of released lots being sold.
Future Outlook
Currently there are 48 lots available for sale to the public, with works on a further 43 lots ready to commence. Based on current forecast by Management, a further pre tax return of $2.60 per $1.00 invested is expected to be returned to investors from the mid of 2011. A total of $0.58 has already been paid to investors as franked dividends. (Mirvac Development Fund — Seascapes March 2010 Quarterly Update).
As there is strong economic data and a decline in the unemployment rate, it is expected that the medium house price will rise. This illustrated by a rise of 6.2% in house sales in Mandurah over 2009. Based on this data, the forecasted completion date for the project is towards the end of 2012. (Mirvac Development Fund — Seascapes March 2010 Quarterly Update).