Century Funds Management

Prospects for

Australian

Commercial

Property – 2011

and beyond

23 February 2011

Representatives

> Jason Huljich – CEO

> Sean Webster – Investment Manager (OFG)

> John Taylor – Head of Distribution

About Us

> CFM is one of the largest unlisted Fund Managers in Australia - $930 million of property – 28 Funds, 49 Properties – Established 1999.

> Strong track record of exceptional returns for our Investors – 15 Funds have been completed with an average total return of 18.45% per annum.

> Century is one of the few Fund Managers that is still able to purchase property and raise the necessary equity. Latest Fund is heavily oversubscribed - 200 Creek Street.

> 80% of the Century portfolio is managed by our experienced in-house property professionals. Skill sets – valuers, experienced leasing agents, development, asset and portfolio management. Century believes that its fundamental property asset experience, coupled with its funds management pedigree, place it in a unique position to maximise value for Investors.

> Century has strong relationships with 4 major banks and has refinanced 21 facilities totalling $318 million over the last 24 months.

OUR PORTFOLIO

CFM Acquisition Strategy

> Macro Economic Overview – start with a map of Australia and identify key themes for the national economy

> Property Market Overview – overlay an understanding of property market fundamentals

> Identify locations and acquisition targets (property specific analysis)

CFM Acquisition Strategy – Part 1

> Macro Economic Overview

– Sean Webster (Investment Manager – OFG)

The Big Picture – Global growth

Global growth – our trading partners

Commodities – by volume

Commodities – by Price

Commodities – the outlook

Commodities – impact on the economy

Commodities – impact on the economy

Commodities – impact on the economy

The outlook for the economy

The outlook for the economy

What is the global outlook from here?

> Low interest rates globally are starting to be reflected in economic growth which is accelerating

> Many developed countries are growing at >5% pa and likely to hold this rate of growth

> Interest rates to start rising globally

> Metal, energy and agricultural prices are likely to remain buoyant but could also be an inflation risk

> Debt issues will continue to be a concern for economies and markets

Australian Economy - Outlook

> Economic growth improving into 2011 (~4%) and ahead of the rest of the Industrial Countries

> Inflation likely to push to the top of the RBA band for next 12 to 18 months

> The RBA is likely to hold rates for the short term but they will trend higher over the medium term dependant on data

> Rising commodity prices will be good for growth but the currency is likely to remain close to parity and interest rates will trend higher

> Risks – Currency gets too strong, RBA moves interest rates too high, China’s growth slows sharply which impacts commodities

CFM Acquisition Strategy – Part 1

Conclusions> What does this mean for property investors?

> Brisbane and Perth are identified as growth areas based on resources

> Buoyancy in the wider economy will lead to white collar employment –positive for office market leasing

> Australia positioned to leverage growth in developing nations –regarded as an attractive and stable location for foreign investors

CFM Acquisition Strategy – Part 2

> Property Market Fundamentals

– Jason Huljich - CEO

Property Market Review

Three key drivers –

› Capital Values

› Vacancy Rates

› Supply Levels

Long Term % Annual Market Returns

(Source: IPD 2010)

Yields

% Annual Returns: Year to 30 Sept 2010

Historical Vacancy - Office Markets

Vacancy Rates - Office Markets

Employment v Hours Worked

Brisbane Demand and BMI

Vacancy Rates - Office Markets

Historical Supply Levels

Supply Restriction

The Property Cycle

CFM Acquisition Strategy – Part 2

Conclusions> What does this mean for property investors?

> Property fundamentals positive

– Valuations stabilising/improving

– Vacancy rates declining

– Limited new supply

> This is the bottom of the cycle/start of the upswing

> We are a net buyer at this point in the cycle

CFM Acquisition Strategy – Part 3

> Property Specific Analysis and Product Structure

– John Taylor – Head of Distribution

Acquisition Case Study – CPT14

> Step 1 Macro Themes – Locations identified related to resources theme - Brisbane and Perth.

We prefer Brisbane for it’s scale (circa 50% of Sydney CBD), and story in QLD infrastructure spending, population growth and resources

> Step 2 Property Market Fundamentals - Short term vacancy an issue in Brisbane – strong initial lease profile required, but represents a counter-cyclical opportunity as other buyers are focused on next 2 years.

> Step 3 – Property Specific Analysis – 200 Creek Street, Brisbane

Acquisition Case Study – Step 3

> 200 Creek Street, Brisbane

Property Fundamentals

- Strong lease profile – 5 yr WALE to Govt

and Multi-National Tenants

- Good Carparking Ratio

- Recently Refurbished

- Fringe Location – popular with mining

services businesses

- Strong Initial yield based on acquisition

price (motivated vendor)

Product Structure

> Investors are seeking investments with the following characteristics;

– Transparency

– Simple trust structures

– No financial engineering

– Clear financing terms

– Reduced gearing levels, and

– Returns derived from cashflows

> In short – “Back to the Future”

Product Structure

> Advisor/Investor Survey had the following key conclusions -

– Combination of income (7-8%) and capital gain (4-6%)

– Gearing levels lower – 50% is the new 65%

– 75% of investors will continue to invest

Century Property Trust 14

> Single Asset, Fixed Term Unlisted Trust

> Initial Gearing at 50%

> Initial Yield at 8.75% growing to average yield of circa 9% over 5 yr term

> 100% Tax deferred for first 2 years

> Offer Closes 28 Feb 2011 – already over-subscribed

Listed v Unlisted

Listed v Unlisted

QUESTIONS?