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Microsoft PowerPoint - Century Funds Management Presentation

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					An Introduction to Century Funds Management

          Chris Martin    Managing Director
          John McBain     Executive Director
          Jason Huljich   General Manager - Property




                   July 2006

          OFM Investment Group Limited
             ABN 22 095 454 336
Why did we acquire Century Funds Management?



   We aim to become the leading provider of financial and lifestyle solutions to the over 50s community

   Property backed income streams are important products for the over 50s market and we believe we have acquired the
   ‘best of breed’ in Century

   The key benefits of the acquisition of Century for OFM include:

   Financial

       The delivery of a recurrent earnings stream, with strong growth potential

       High EPS accretion potential

       High return on invested capital potential

   Strategic

       The establishment of a strong and highly scalable platform for growth in property funds management

       The acquisition of a very experienced property management team, who have assumed responsibility for OFM’s
       existing property assets

       The acquisition of a high net worth client base, to whom OFM can seek to cross-sell other group products




                                                                                                                       Page 2
Why did we acquire Century Funds Management?



    Strategic benefits continued

        The ability to work with Century management to broaden the distribution of Century product and to develop new
        product for OFM’s core over 50’s market

        The utilisation of the remaining shares within the unverified shareholders trust, realising a capital gain for
        shareholders and a consequential special dividend

        The introduction of a cornerstone investor who is committed to the ongoing growth and development of the
        business




                                                                                                                         Page 3
An overview of Century Funds Management



   Established by John McBain and Jason Huljich in 1999 with the aim of building a highly scalable property funds
   management business
   Merged with Bankminster Properties Limited in December 2004, with Bankminster vendors remaining within the
   Century management team

   Now a team of 17 people, with a track record of delivering superior investment performance for investors and strong
   profit growth for the group

   Century is one of the largest property trust managers in Australia outside the major “institutional” groups with funds
   under management of approximately $480 million (in addition, the Century team has also assumed responsibility for
   managing the existing OFM property portfolio of approximately $100 million)

   Since inception, Century has created and distributed 21 unlisted property trusts to its client base of approximately 800
   investors

   With a proud heritage of client service and a total returns focus, the Century Funds Management brand, culture and
   operational strategy will be retained within OFM. The marriage of the two groups will, however, offer greater
   opportunities for growth




                                                                                                                              Page 4
      An overview of Century Funds Management



      Strategy
           Century creates unlisted property trusts for high net worth individuals (minimum investment to date has been
           $100,000)

           Century’s core investment philosophy is one of total return. Century believe that capital growth should play a key role
           in the returns delivered by property investment

                  This ‘total returns’ philosophy facilitates investment in properties or markets which may be “out of favour”. In
                  these circumstances Century may be prepared to take a contrarian approach where there is compelling evidence
                  of positive underlying market factors such as infrastructure development or supply/demand imbalance

                  The total returns focus has generated superior investment performance for investors, as evidenced by Lonsec
                  research which has found that Century has delivered an average total return of 16.8% p.a. from January 2000 to
                  December 2005, compared to an 11.5% p.a. total return by the Mercer Unlisted Index benchmark over the same
                  period

                  The statistics from Property Investment Research highlight that Century’s out-performance is driven by capital
                  gains realised on investments

                                                                      2001(1)        2002(1)      2003(1)      2004(1)     Century(2)
                                                                        Mkt            Mkt          Mkt          Mkt     Since inception
                                       Average Annual Return           10.5%          9.9%         9.6%         9.4%          9.0%
                                       Capital Gains                   4.3%           4.5%         4.5%         5.5%          8.4%
                                       Total Returns                   14.8%          14.4%       14.1%        14.9%         17.4%


(1)    "Market" includes open ended property funds and closed end syndicates. Source: Property Investment Research
(2)    Century corporate information
                                                                                                                                           Page 5
An overview of Century Funds Management



Strategy continued…
    Century’s commitment to investor relations is a key strategic differentiator

         Century has created a “club” like environment for clients with high priority placed on these relationships

         Annual investor functions, where investors are given a detailed briefing regarding their investment, provide a forum
         where investors can meet their co-investors and raise issues directly with the Manager. In addition a regular
         “Investor Update” is provided to all Century investors.

         The superior service levels help drive the high incidence of repeat investment

    Century (either the founders individually or the Century Funds Management group) has, to this point in time, always
    held a stake in any trust launched, ensuring investors understand that the goals of the Century team are aligned with
    those of other investors

Property Portfolio

    Of the 21 property trusts that have been created, 20 are closed end syndicates, with one open ended trust, the Century
    Balanced Fund No. 1. The details of the trusts are contained in Appendix 1.

    Future trusts will consist of both closed end syndicates and open ended trusts, dependent upon the nature of the assets
    acquired




                                                                                                                                Page 6
An overview of Century Funds Management



    Has expertise across commercial, industrial and   Portfolio is primarily NSW based currently
    bulky goods sectors:



              Century Funds Management:                       Century Funds Management:
                  % of FUM by Sector                              % of FUM by State



                                                                         SA
                                                                   QLD   5%
         Industrial
                                                                   3%
            19%                                              VIC
                                                             8%




Bulky Goods                               Office
    21%                                    60%




                                                                                      NSW
                                                                                      84%




                                                                                                   Page 7
An overview of Century Funds Management



   Client Base and distribution network
       Century has a loyal client base of approximately 800 high net worth individuals in Sydney

       Century has, until recently, focused on distributing product via the existing client network. Limited distribution has
       commenced via financial planners with the importance of this channel expected to increase

   Management Team

       The Century management team is exceptionally strong, exhibiting a combination of experience, knowledge and
       passion

       The founders of the Century and Bankminster businesses remain within the management team. All funds
       management staff have joined OFM

       The Century senior management team, who all owned an equity stake in Century Funds Management are now all
       shareholders in OFM. Together they hold approximately 12% of OFM




                                                                                                                                Page 8
Product development and realisation of revenue



                      PRODUCT DEVELOPMENT PHASE                                               FEES
 1.   Identify and acquire the asset and create the trust
          Performance history indicates good track record in identifying attractive
          acquisitions opportunities
                                                                                      Establishment fees (% of
 2.   Attract the investors                                                           acquisition price)
          Century trusts are generally funded by the existing network of clients
          New products are offered to existing clients first

 3.   Manage the trust/ underlying asset                                              Ongoing syndicate
          While management fees are charged for the management of the trust,          management fees (% FUM)
          asset management fees are also captured in many cases via an internal
                                                                                      Ongoing property
          property management company
                                                                                      management fees (% rent)
 4.   Develop the asset
          Century has had considerable success in development of the
                                                                                      Development fees (% of
          properties, including strata title conversions
                                                                                      property value)
          Proven area of skill, evidenced, in part, by the strong capital growth
          delivered by Century since inception




                                                                                                                 Page 9
Product development and realisation of revenue



                     PRODUCT DEVELOPMENT PHASE                                            FEES
 5.   Exit the asset (closed end syndicates)
          There are a number of potential exit strategies including               Performance fees ( % profit
                   Sale – whole property                                          on sale
                   Sale – strata titled                                           Sales fees ( % of sale price)
                   Extension of trust
                                                                                  “Stapling” fees (% of FUM in
                   “Stapling” of trusts to form new multi-asset open ended fund   new stapled vehicle)




                                                                                                              Page 10
An overview of Century Funds Management



Growth Prospects
    There are three key drivers of profitability:

    1.   Level of ongoing property acquisition

    2.   Breadth of product development

    3.   Width of distribution of product

    Having regard to these profit drivers, there are a number of specific areas in which Century can grow its current
    business:

         As highlighted on page 7 , Century has been NSW ‘centric’ to date. As part of the broader OFM group, there is
         the potential to expand nationally, not only in terms of property acquisition but also in terms of distribution

         Traditionally Century has focused on acquiring buildings in the $10-$30 million range. There is now the opportunity
         to acquire larger buildings. These can be syndicated (via the Century Balanced Fund No. 1) or may form part of a
         wholesale product release

         Widen the distribution channels: As outlined previously, it is only recently that Century has sought to distribute
         product via financial planners.

         Development of new property back securities suitable for OFM’s core over 50s market




                                                                                                                              Page 11
Contact Details



 Chris Martin
 Managing Director
 OFM Investment Group
 Level 16, 379 Collins Street
 Melbourne Victoria 3000


 Phone: (03) 9616 6500

 www.ofmig.com.au

 www.centuryfm.com.au




                                Page 12
Appendix 1 – The Century Portfolio


Fund                                         Property                                 Sector        State

Century Balanced Fund No. 1                  3 Carlingford Rd, Epping                 Office        NSW

                                             107 Mount Street, North Sydney           office        NSW

                                             35 Bessemer St Blacktown                 Industrial    NSW

                                             44 Hampden Road, Artarmon                Office        NSW

Century North Ryde Investment Trust          Building A, 80 Waterloo Rd, North Ryde   Office        NSW

Century North Shore Investment Trust No. 3   339 Military Rd, Cremorne                Office        NSW

Century North Shore Investment Trust No. 5   16 Byfield St, Nth Ryde                  Office        NSW

Century North Shore Investment Trust No. 6   357 Military Rd, Cremorne                Office        NSW

Century Property Trust Number 7              17 Market St, South Melbourne            Office        VIC

Century Property Trust Number 8              Warwick Farm Homestead                   Bulky Goods   NSW

511 Pacific Highway Syndicate                511 Pacific Highway, St Leonards         Office        NSW

Century Diversified Trust No. 9              12 Butler Rd, Hurstville                 Office        NSW

                                             Harvey Norman Centre, Griffith           Bulky Goods   NSW

                                             Griffith Hometown, Griffith              Bulky Goods   NSW

Century Property Trust No. 10                601 Bourke Street, Melbourne             Office        VIC




                                                                                                            Page 13
Appendix 1 – The Century Portfolio



Fund                                Property                                   Sector        State

Springwood Hometown Syndicate       Springwood Hometown                        Bulky Goods   QLD

Century Property Trust No. 11       2 Lincoln St, Lane Cove                    Office        NSW

2 Australia Avenue Partnership      2 Australia Avenue Homebush Bay            Industrial    NSW

4-8 Woodville Street Unit Trust     4-8 Woodville St, Hurstville               Office        NSW

44-54 Mandoon Road Unit Trust       44-52 Mandoon Rd, Girraween                Industrial    NSW

16-18 Bridge Street Unit Trust      16-18 Bridge St, Epping                    Office        NSW

6 Herb Elliot Avenue Unit Trust     6 Herb Elliot Av, Homebush Bay             Industrial    NSW

100 Bennelong Road Unit Trust       100 Bennelong Rd, Homebush Bay             Industrial    NSW

Bankminster Property Trust No.9     15-17 Loyalty Rd, Nth Rocks                Industrial    NSW

                                    924 Pacific Highway, Gordon                Office        NSW

Bankminster Property Trust No. 10   110 Pacific Highway, St Leonards           Office        NSW

Bankminster Property Trust No.11    11 Sheridan Close, Milperra                Industrial    NSW

                                    519 Cross Keys R, Cavan, South Australia   Industrial    SA

New West Gosford Trust              West Gosford                               Bulky Goods   NSW




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