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VALUATION REPORT

828 Pacific Highway,Gordon NSW

Date: 22nd July, 2011

CONFIDENTIAL AND FOR THE SOLE USE OF KU-RING-GAI COUNCIL

Under Instructions Ms Deborah SilvaFrom: Manager – Strategic Assets and Property

ServicesKu-ring-gai CouncilLocked Bag 10056Pymble NSW 2073

Valuation No: 11-2782

Prepared by: BEM Property Consultants Pty Ltd

Level 4, 12 Mount Street, North Sydney NSW 2060All Correspondence to: PO Box 1741,North Sydney NSW 2059Ph: (02) 8920 3044Fax: (02) 8920 3055www.bemproperty.com.au

Property: 828 Pacific Highway, Gordon NSWValuation Date: 22nd July, 2011Valuation Number: 11-2782

BEM Property Consultants Pty Ltd of 44

Various Views of Subject Property



Entrance from McIntyre Street



Various Views of Forecourt Area



Pedestrian Entry to Building

Entry Foyer



Entry Foyer

View of Refurbished Level 1 Suite 102



Various Views of Basement Levels



TABLE OF CONTENTS

1. EXECUTIVE SUMMARY .........................................................................................9

2. INTRODUCTION .................................................................................................12

3. LOCATION .........................................................................................................12

4. TRANSPORT AND RETAIL SERVICES......................................................................13

5. ENVIRONMENTAL ..............................................................................................13

6. ROAD ACCESS ....................................................................................................14

7. SERVICES...........................................................................................................14

8. LAND ................................................................................................................14

9. TOWN PLANNING ..............................................................................................15

10. IMPROVEMENTS................................................................................................16

11. AGE AND CONDITION.........................................................................................18

12. STATUTORY LAND VALUE ...................................................................................19

13. TENANCY DETAILS..............................................................................................19

14. MARKET COMMENTARY.....................................................................................24

15. MARKET EVIDENCE ............................................................................................26

16. BASIS OF VALUATION.........................................................................................36

17. VALUATION APPROACH .....................................................................................37

18. MARKETABILITY PROFILE....................................................................................42

19. COMPANY QUALIFICATIONS ...............................................................................43

20. VALUATION.......................................................................................................44

ANNEXURES TO THIS REPORT

COPY OF DEPOSITED PLAN

COPY OF TITLE

COPY OF FLOOR PLANS

COPY OF TENANCY SCHEDULES PROVIDED BY GE AND CBRE

COPY OF VALUATION CALCULATIONS



1. EXECUTIVE SUMMARY

Property Address: 828 Pacific Highway, Gordon, NSW

Brief Description: The subject property is known as the ‘Sun’ building, andoccupies a corner site having frontages to both the PacificHighway and McIntyre Street, Gordon.

The land comprises a large allotment which slopes substantiallyfrom the Pacific Highway frontage, to the rear boundary.

Erected upon the land is a commercial office buildingcomprising five (5) levels of office accommodation and four (4)levels of basement car parking containing a total of 252 carspaces.

Land Area: 4,182 m²

Building Area: 7,436.4 m² of net lettable area as advised by GE.

Title: Lot 1 in Deposited Plan 786550, comprising the whole of theland within Folio Identifier 1/786550.

Tenancy Details: The land is subject to a long term lease from the Council of theMunicipality of Ku-ring-gai to Luteus Pty Ltd which expires onthe 25th August 2090 at a forecast annual rental of $67,141 foryear 2011/2012.

We have been provided with a copy of the tenancy schedule bythe property manager which indicates that the current incomeprofile for the building is as follows:

Total Base Rent: $2,509,563

Outgoing Recoveries from Tenants: $529,382

Total Gross Income: $3,038,944

Estimated Outgoings: $697,522 p.a.*

* Note: We have allowed for insurance premium of $25,000p.a.

Zoning: The subject property is zoned “B4 – Local Centre” under Ku-ring-gai Local Environmental Plan (Town Centres) 2010.

Purpose of the Report We have been advised that Ku-ring-gai Municipal Council hasexpressed an interest in purchasing the subject property,eventually for owner occupation.

Accordingly, to assist in the acquisition negotiations we havebeen requested to provide valuations, as follows:



1. Current market value of the building excluding Council’sground lease, and

2. Market value of the subject property based upon its currentrental profile and income stream, including Council’sground lease income, and

3. Advise whether there is any special value for Council asopposed to another potential purchaser, that should beconsidered.

Letter of Instruction: By email dated 20th July, 2011

Definition ofMarket Value:

The Australian Property Institute has adopted the InternationalAssets Valuation Standards Committee definition of MarketValue:“Market value is the estimated amount for which a propertyshould exchange on the date of valuation between a willingbuyer and a willing seller in an arms length transaction, afterproper marketing, wherein the parties had each actedknowledgeably, prudently, and without compulsion”.

RISK ANALYSIS

Strengths: The subject property is located within the desirablenorthern suburb of Gordon, in the Gordon commercial retailprecinct.

The land comprises a substantial corner site which has aprominent position within the Gordon town centre. Theland adjoins Ku-ring-gai Council Chambers.

There are 252 basement car spaces within the building.

Weakness: The subject property is subject to a long term ground lease.

There are a number of major tenants including Sun MicroSystems Australia Pty Limited and ENSR Australia Pty

Limited with the leases coming up for expiry, being 30th

June, 2012 (early termination provisions) and 30th

November, 2010 respectively.

Opportunities: The current building virtually maximises the developmentpotential of the land.

The opportunity exists for Council, should they proceed topurchase the property, to fully occupy the current vacanttenancy areas, and slowly back fill the occupied tenancieswhen they become vacant.

Should Council wish to maintain the cashflow theopportunity exists to lease the current vacancies within thebuilding at prevailing market rents.



Threats: A further down turn in the real estate market as a result ofthe fallout from the Global Financial Crisis.

There are signs of a global economic weakening which mayimpact property funding in future times.

Date of Inspection: 22nd July, 2011

Date of Valuation: 22nd July, 2011

Interest Valued: Freehold title subject to the ground lease and existing tenancieswithin the building.

Statement of Conflictof Interest:

The writer wishes to advise that BEM Property Consultants PtyLimited Property Consultants Pty Ltd has provided an unbiasedopinion of value and does not have any pecuniary interest inthe subject property for the purpose of this valuation orotherwise.

VALUATION: We have assessed the value of the subject property being 828Pacific Highway, Gordon as at 22nd July, 2011 and subject to thedetails referred to herein, at:

BASIS 1 – Current Market Value of the Building excludingGround Lease:

Twenty One Million Five Hundred and Seventy ThousandDollars: .................................................................. $21,570,000

BASIS 2 – Market Value of the Subject Property based onits Current Rental Profile and Income Stream includingCouncil’s Ground Lease Income:

Eighteen Million Four Hundred and Thirty Thousand Dollars............................................................................... $18,430,000

BASIS 3 – Special Value to Ku-ring-gai Council as an AdjoiningOwner:

Twenty Million Two Hundred and Seventy Five ThousandDollars to Twenty One Million Two Hundred Thousand Dollars:.......................................................$20,275,000 to $21,200,000

Note: The above valuation ranges are exclusive of Goods andServices Tax

This Valuation Summary provides a brief overview of the contents of this Valuation Report and doesnot constitute a Valuation in its own right. We recommend that the full Valuation Report, whichcontains specific information relative to forming our Valuation conclusion, be fully read in addition tothe Valuation Summary.



2. INTRODUCTION

By email dated 20th July, 2011, we have been instructed by Ms Deborah Silva, Manager –Strategic Assets and Property Services, Ku-ring-gai Council, to determine:

1. The current market value of the building, excluding ground Council’s lease,

2. Market value of the subject property based upon its current rental profile and incomestream, including Council’s ground lease income, and

3. Advise whether there is any special value for Council as opposed to another potentialpurchaser, that should be considered.

3. LOCATION

The subject property is located upon the western side of the pacific Highway on the corner ofMcIntyre Street and provides a large corner site.

Gordon is located within the Local Government Area administered by Ku-ring-gai Council, is anupper northern suburb of Sydney and is situated approximately 18 kilometres north-west of theSydney Central Business District.

The surrounding development generally comprises a mixture of retail/commercial propertieslocated along the Pacific Highway with recently constructed strata title residential unit buildingsand older single lot residential subdivisions on the highway and in the surrounding streets.

The Pacific Highway is a national highway and as such carries a heavy volume of traffic, especiallyduring peak hours.

Please refer to the following locality map and aerial photograph:



4. TRANSPORT AND RETAIL SERVICES

The following services and amenities are within close proximity to the subject property:

Public Transport

Rail – rail transport is located within 300 metres of the subject property.

Retail

Located within 200 metres of the subject property.

Schools

Various schools are located within 400 metres of the subject property.

5. ENVIRONMENTAL

It must be noted that we are not qualified to provide expert advice in respect to any existing orpotential site and building contamination pertaining to the subject property. We have not beeninformed of any environmental or geotechnical problems that may exist.



Also, we have not been provided with any reports including Environmental Audits that may have arelevant bearing upon our valuation assessment, and accordingly, for the purpose of ourvaluation, we have assumed that no defects or contamination of the subject property exists.

There is an existing commercial building located upon the land, and we are unaware of theprevious use of the site. For the purpose of our report, we have assumed there is no onsitecontamination.

As such, we have no reason to suspect the land suffers from any contamination, however, thevaluer is not an environmental expert and an environmental audit would have to be undertaken,to verify that the subject site is free of contamination. If at some future date we are advised thatthe land does in fact suffer from some form of contamination, then we should be consulted as tothe effect of such advice upon our valuation.

6. ROAD ACCESS

Pacific highway is a national highway and carries a heavy volume of traffic. Pacific Highway is asealed road and has formed kerbing and guttering and foot paths. McIntyre is similarlyconstructed and carries a lesser volume of traffic.

We have not undertaken any other searches in respect to the subject land in relation to anyproposed requirements for either resumption for road widening purposes or any other purposes,and have assumed that the property is not adversely affected.

7. Services

We have assumed that the following services would be available for connection to the property:

Gas Electricity Water Sewer Telephone.

8. LAND

8.1 Title Details

Lot 1 in Deposited Plan 786550, comprising the whole of the land within Folio Identifier 1/786550.

8.2 Registered Proprietor

The registered proprietor is the Council of the Municipality of Ku-ring-gai.

A copy of the computer folio title search is attached as an annexure to the rear of this report.



8.3 Notifications and Easements

There are a number of notifications including easements, subleases, transfer of leases, leases etc.on title. For further details please refer to a copy of title annexed to the rear of this report.

Unregistered Dealings: Nil

We have not undertaken detailed searches in respect of all the various notations listed within thesecond schedule of the various titles. Our valuation assumes that the property is free of anyenvironmental impediments, restrictions or encumbrances which may have a detrimental effecton the value of the property. Should we be advised of any issues that may have a relevant bearingupon the value of the property, we reserve the right to review our assessment.

8.4 Land Topography and Dimensions

The subject property is slightly irregular in shape and has a splayed frontage to the PacificHighway/McIntyre street intersection. The site falls steeply from Pacific highway frontage to thesouth western boundary.

The subject allotment has the following dimensions:

Description Area

Frontage to Pacific Highway 60.71 metres (Approx.)

Rear Boundary 51.43 metres

Northern Side Boundary 63.90 metres

Southern Side Boundary 89.19 metres

8.5 Site Area

The site area indicated by Deposited Plan 786550 is 4,182 square metres.

9. TOWN PLANNING

The subject land is zoned “Business 3(a) – (A1)” under Ku-ring-gai Planning Scheme Ordinance asamended 31 October, 2008.

1. Objectives of Zone

The Objectives of this zone are:

(a) To identify existing business centres within the Municipality, the principle functions ofwhich are to satisfy the retail and community service demands of the community whichthey serve;



(b) To permit, with the business centres’ hierarchy, business and office premises of a scale andcharacter which do not threaten the role of the business centres as described in (a) above;and

(c) To permit other community facilities, recreation, leisure and general services within thezone to meet the needs and demands of employees within the centres and the communitywhich each centre services.

2. Without Development Consent

Nil.

(item 3 omitted and new Item 3 inserted by Local Environmental Plan No 180 vide GovernmentGazette No 168 of 22 December 2000)

3. Only with Development Consent

Advertising signs; internal alterations to a building or work.Any other purpose not included in Item 4.

4. Prohibited

Caravan parks; car repair stations; dwelling houses (other than those used in conjunction withpurposes permitted in this zone); extractive industries; gas holders; generating works;industries (other than light industries); institutions; junk yards; liquid fuel depots; mines; panelbeating workshops; roadside stalls; stock and sale yards; transport terminals; warehouses;wholesale markets.

The land has a Floor Space Ratio of 2:1.

The existing use is permissible under the zoning.

The above information was obtained from Council; however, we have not sighted a Certificateunder Section 149 of the Environmental Planning and Assessment Act 1979, to verify it.

10. IMPROVEMENTS

Erected upon the land is a modern multi-level commercial building, comprising four (4) levels ofsecure basement car parking, entry lobby from Level 3 with five (5) levels of officeaccommodation, and 252 car spaces.

Each office level has external open balconies, generally to the northern and western elevations.

The building is currently leased to five (5) tenants (excluding 6 car spaces leased to Ku-ring-gaiCouncil) and has vacant areas of 1,253.3 m2 which represents 16.85 % of the total net lettablearea of 7,436.4 m2.

Within 11 months a further 5,205.2 m2 will become vacant (70% of the total building).



10.1 Construction Details

Floors: - Steel reinforced concrete.

External Walls: - Concrete slab façade.

Internal Walls: - Predominantly painted plasterboard within officeareas.

Ceilings: - Acoustic tile ceilings throughout with recessedfluorescent light fittings and air conditioning diffusers.

Windows: - Colorbonded aluminium.

Roof: - Painted rendered walls.

10.2 Accommodation

Basement: - Vehicular access is currently available from McIntyreStreet and through Council’s adjoining site to thesecured basement car parking area which hasautomatic opening gates and comprises steelreinforced concrete floors and fixed fluorescent lightfittings.

The 3.5 levels of basement car parks provide parkingfor 252 vehicles.

Ground Floor: -

Floors 1 – 5 inclusive

Generally, the floors comprise typical commercialoffice standard accommodation, with polished granitefloors to the entry vestibule from Level 3 into theentrance foyer and lift lobby. Generally, the floorplates have either carpeted or carpeted tile (asevidenced within the refurbished Level 1 Suite 102tenancy area), painted plasterboard walls and acoustictiled ceilings with fluorescent light fittings and airconditioning diffusers.

Amenities: - Male and female amenities are provided on each leveland are generally fitted out with ceramic tiled floors,ceramic tiled walls, porcelain basin, wall mountedmirrors and wall mounted hand dryers.

Male amenities comprise three (3) toilets and three (3)porcelain urinals.

Kitchenette: - Each floor has a small kitchenette with generally vinylfloor coverings and comprise a single stainless steelsink set in timber laminated floor cabinet with wallcabinets.

General: - There are two (2) sets of stairs from the PacificHighway frontage to the front forecourt area of the



building, which has been well landscaped and haspotted plants, and provides a pleasant entry into thebuilding.

10.3 Building Areas

First Floor Level: - 1,938.3 m2

Level 2: - 1,791.7 m2

Level 3: - 1,485.3 m2

Level 4: - 1,225.8 m2

Level 5: - 995.3 m2

Total: - 7,436.4 m2

10.4 Building Services

Services provided to the building include the following:

Ducted air conditioning throughout with zoned air conditioning controls for after officehours being available

Emergency Exit lights

Key card security

Four (4) kg 16 person capacity Otis lifts, three (3) of which provide access to all buildinglevels, with one (1) lift servicing all basement car parking levels, and

Three (3) remote controlled access gates to the basement car parking levels.

10.5 Fire Protection

Smoke and thermal detectors are fitted throughout, fire stairs and illuminated Exit signs and wallmounted fire extinguishers.

11. AGE AND CONDITION

We have been advised that the improvements were completed in 1992. Generally the building isin a condition commensurate with its age and use.

During our on-site inspection, we did notice substantial cracking through various levels of thebasement car parks. Water was penetrating from upper levels of the basement car parking tothe underside of the steel reinforced concrete slab, and we strongly recommend that this beinvestigated by Council’s Structural Engineer.

We have carried out an inspection of exposed and readily accessible areas of the improvements.However, the valuer is not a building construction or structural expert and is therefore unable to



certify the structural soundness of the improvements. Readers of this report should make theirown enquiries in this regard.

We were also unable to inspect parts of the premises that were unexposed or inaccessible andtherefore cannot say that such parts are free from defects. We are not aware of, nor have webeen advised as to the presence of asbestos within the building, unless where stated in thisreport.

Further, we did not observe any obvious signs of any pest infestation, however a current PestCertificate should be obtained to confirm this superficial observation. Should such a certificatereveal any existing pest problems with the building, then we reserve the right to reassess ourvaluation.

This valuation is made subject to the issue of a satisfactory certificate of compliance under Section149A: Building Certificates, of the Environmental Planning and Assessment Act 1979.

12. STATUTORY LAND VALUE

The current statutory land value for the subject property as at 1st July 2010 is the amount of$4,480,000.

13. TENANCY DETAILS

We have been provided with a copy of the tenancy schedule from the managing agent, whichindicates the following tenancies:

1. PREMISES Level 1, Suite 101, 828 Pacific Highway, Gordon

Area: - 933.3 m2 + 15 car spaces

Sub Lessor: - GE Real Estate Investments Australia Pty Ltd

Sub Lessee: - Monarch (Sales) Pty Limited

Term: - Seven (7) years

Commencement date: - 1st October, 2004

Termination date: - 30th September, 2009

Options: - One (1) x three (3) years.

Initial Rent: - $282,060 p.a. base rent

Current Rent: - $317,279 p.a. + recoveries(Equates to $340/m2 p.a. net excluding parking)

Outgoings: - 12.68% of all outgoings

Rent Reviews: - Annual 4%

Use: - Commercial Offices

GST: - The tenant is liable for GST.



Note: The expiry date of this lease was extended to 30th September, 2011.

2. PREMISES Levels 2 & 3, 828 Pacific Highway, Gordon

Area: - 3,277 m2 + 120 car spaces


Sub Lessee: - Sun Microsystems Australia Pty Limited

Term: - Five (5) years

Commencement date: - 1st July, 2009

Termination date: - 30th June, 2014

Options: - Three (3) x 3 years

Initial Rent: - $1,065,025 p.a. base rent

Current Rent: - $1,110,288 p.a. + recoveries(Equates to $339/m2 p.a. net excluding parking)

Outgoings: - 44.3 % of all outgoings

Rent Reviews: - Annual 4.25%



Note: Sun Microsystems have recently exercised the early termination option within the leaseand will be vacating the premises on 30th June, 2012.


Area: - 663 m2 + 28 car spaces


Sub Lessee: - Webb Australia Group (NSW) Pty Limited

Term: - Six (6) years

Commencement date: - 1st August, 2010

Termination date: - 31st July, 2016

Options: - Three (3) years



Outgoings: - 8.92% of all outgoings

Rent Reviews: - 3.5% annually








Sub Lessee: - Drug Safe Australia Pty Limited


Commencement date: - 1st August, 2011

Termination date: - 31st July, 2016

Options: - Five (5) years

Initial Rent: - $88,060 p.a.



Rent Reviews: - 4% annually



Note: This is a new lease which commenced on 1st August, 2011. We have sighted a copy ofthe Sub Lease document which has been executed by both parties, however has notbeen registered on title.

The Sub Lessor has provided a fit out contribution of $90,000 to the Sub Lessee inaddition to an incentive equivalent to a rent free period of $86,120.


Area: - 248.3 m2


Sub Lessee: - Information Gateways Pty Limited


Commencement date: - 15th September, 2011

Termination date: - 14th September, 2016



Current Rent: - $ Nil p.a. + recoveries(Equates to $290/m2 p.a. net excluding parking)

Outgoings: - A proportion of the share of outgoings based on tenancyarea as a percentage of the building.

Rent Reviews: - 4% annually





Note: This proposed lease is subject to the Sub Lessor’s incentive of $108,010 plus GST. Thetenant must apply the Landlord’s contribution evenly across each monthly installmentof rent payable during the term of the lease, such that each monthly installmentpayable is reduced by $1,800.18 plus GST. Building expenses and statutory outgoingsare currently budgeted at $90.44/m2 plus GST for projected year ending 30th June, 2012.

For the purposes of our valuation, we have assumed that this rental will commence onthe above date.




Sub Lessee: - HLA – Envirosciences Pty LtdENSR Australia Pty Limited

Term: - Six (6) years, 2 months

Commencement date: - 1st October, 2004

Termination date: - 31st May, 2011





Rent Reviews: - 3.5% annually



Note: This tenant is on holdover and is due to vacate within 30 days

In addition to the above commercial rents, Ku-ring-gai Municipal Council lease six (6) car spaceswithin the building, and in accordance with the agreement with Council, no charges are allocatedto these car spaces.

13.1 Income Profile

We have been provided with a copy of the tenancy schedule by the property manager whichindicates that the current income profile for the building is as follows:

Total Base Rent: $2,509,563

Outgoing Recoveries from Tenants: $529,382

Total Gross Income: $3,038,944



Estimated Outgoings: $697,522 p.a. *

* Note: We have allowed for insurance premium of $25,000 p.a.

13.2 Ground Lease Details

The site is subject to a long term ground lease, the details of which are as follows:

Lessor: - The Council of the Municipality of Ku-ring-gai

Lessee: - Luteus Pty Ltd

Term: - 99 years

Commencement date: - 26th of August 1991

Termination date: - 25th August 2090

Rental upon Commencement: - The greater of:A. $400,000B. Seventeen and one half precent (17.5%) of the net

income.

Rental after Year 1

The annual rental payable during each of the subsequent years of the term hereby demisedshould be seventeen and a half precent (17.5%) of the net income.

We have been advised by Ku-ring-gai Council that the rentals received for the subject propertybased on the formula above, have been as follows:

Financial Year Amount Paid to Council

FY 1995 - 1996 210,368

FY 1996 - 1997 257,814

FY 1997 - 1998 280,111

FY 1998 - 1999 261,998

FY 1999 - 2000 257,661

FY 2000 - 2001 300,357

FY 2001 - 2002 498,004

FY 2002 - 2003 477,871

FY 2003 - 2004 228,552

FY 2004 - 2005 251,801

FY 2005 - 2006 294,804

FY 2006 - 2007 399,832

FY 2007 - 2008 413,776

FY 2008 - 2009 382,326

FY 2009 - 2010 151,316

FY 2010 - 2011 181,387 Forecast rental

FY 2011 - 2012 67,141 Estimated



All rents are shown in GST exclusive amounts.

Assignment of lease

The lessor consented to an assignment of the lease from Suncap Pty Ltd to GE Real EstateInvestments Australia Pty Ltd. This assignment took place on the 21st of December 2006.

Note: The above schedule indicates a substantial variation in the ground rental being paid toCouncil. This is due in part to the loosely worded clause within the lease, relating to expenses tobe deducted from the gross rental, upon which the ground rent which is equivalent to 17.5% ofthe net rental as derived.

We note that clause 1(i) notes: “Contribution to the maintenance of a reasonable sinking fund tocover repairs (including structural repairs other than where such structural repairs wereoccasioned solely as a direct result of any major defect in the design and construction of thebuilding) and replacement of plant and equipment” and clause 1(k): “Any other outgoing directlyrelated to the maintenance of the operation of the building”.

These clauses are widely encompassing, and in our opinion favour the lessee as there is nominimal ground rental and the actual ground rental payable each year varies considerably asindicated by the schedule of payments to date.

A review of the ground rents paid since the lease inception indicates a wide variation of groundrentals, and accordingly it is very difficult to ascertain the true interest of the lessee and lessordue to the wide variation in rentals being paid to Council.

14. MARKET COMMENTARY

14.1 World / Australian Economies

The leading world economies continue to grapple with fallout from the Global Financial Crisis ofSeptember, 2008. The United States economic recovery remains patchy in early 2011 with highunemployment still restraining consumer spending. However, the Chinese economy hascontinued to show sound economic growth throughout 2010, as a direct result of its stimulusspending and very strong domestic consumer demand.

The floods in Queensland, NSW and Victoria, the cyclone in far north Queensland, and potentiallythe Japanese earthquake will have an impact upon the Australian economy.

The News South Wales economy has struggled in recent years however it remains to be seen ifthe change of government to Liberal will reverse the poor economic performance of NSWcompared to the majority of other States and Territories.

The Australian economy remains relatively stable, following a return of the Labour FederalGovernment in late 2010, on the back of growth in the resources sector.

GDP grew by 2.7% and is forecast to increase to 2.8% in 2011 and 4% in 2012.



The Reserve Bank last increased the official cash rate in November, 2010 by 25 basis points to4.75%, the seventh 25 basis point rise since October, 2009. Forecasts are for a potential furtherincrease in June of 25 basis points.

During the GFC the Australian dollar was trading at around 0.65 cents, and today is slightly abovethe US dollar. It is expected to remain high through 2011 supported by demand for Australiancommodities.

Unemployment was at a 30 year low in April, 2008 with a rate of 3.9%, and in February 2011 wasat 5%. Continued low unemployment has highlighted the strength of the Australian economy.

14.2 Sydney Real Estate Market

Following the GFC in 2008 the Sydney market saw a loss of confidence and value falls through to2009, however there has been a general strengthening in market fundamentals since 2009through to the current time.

The Commercial sector has undergone significant change with the REIT market experiencing largeshare price falls after the GFC, enormous asset pressure and a virtual withdrawal from the realestate market as buyers. As a consequence both volume and value of commercial and industrialsales fell soon after the GFC but following a period of recapitalisation the REITS are back in themarket, although are still relatively quiet. At the lower end of the investment market, Mum andDad investors have dominated the sub $5mill market, and yields have firmed slightly.

The commercial leasing markets are strengthening on the back of increasing tenant demand andreducing vacancies, and of late, there is a growing feeling amongst landlords that the highprevalent incentive levels of circa 25%, in the major Business Centres, will soon begin to fall. Ofinterest, ‘A’ grade properties across the various markets are seeing the lowest vacancy levels, withthe majority of vacancy in B and C grade property.

The Industrial markets have also begun to rebound following the GFC. Agents and marketreporters highlight an increase in demand for prime property and reduction in yields. Owneroccupiers have re-entered the market and have driven land sales and vacant possessions sales.

Leasing demand has increased and rents and yields have stabilised. It is relevant to note thatrental rates in Sydney’s industrial suburbs have seen minimal growth over the last 10 years.

The industrial market will continue to discriminate between locations with suburbs supported bygood transport infrastructure likely to outperform inner suburbs with poor access and olderdevelopment.

The Sydney housing market has also stabilised post GFC when prestige locations saw large pricefalls in 2010. There was solid growth with capital values increasing by 6.6% however this largelyoccurred through the first half of the year. Anecdotal evidence suggests the market remainspatchy with variances between the top, middle and lower ends and between the housing and unitmarkets. The market in 2011 is far less buoyant than in 2010 due to increasing interest rates andnegative market sentiment.

Many reporters are predicting limited capital growth in the short term. Future price growth willbe heavily influenced by interest rate movements and underlying economic conditions. Of



relevance, Sydney house prices are high by international standards and of the least affordable ofthe world cities considered by Demographia in its annual ‘International Housing AffordabilitySurvey’.

15. MARKET EVIDENCE

A number of sales have occurred within the surrounding locality, and we have relied upon thesetransactions in assessing the value of the subject property.

The sales evidence we have externally inspected is as follows:

15.1 Sales Evidence

1. Address: 75 Miller Street,North Sydney

Sale Price: $22,250,000

Sale Date: 19 January, 2011

Land Area: 778.8 m2

Building Area: 4,928.6 m2

Description: This property comprises the former Westpac Training Centre,which has two (2) levels of basement car parking for 39 motorvehicles, ground floor retail space and twelve (12) upper levels ofoffice accommodation.The building was constructed circa 1973 and subsequentlyinternally refurbished in mid 1993.The property was sold substantially leased with rental guaranteesin place for a small vacancy, with the initial yield assumed on afully leased basis, to be circa 10.3%.

Analysis: Sale shows $28,570 per m2 of site area improved.Sale shows $4,514 per m2 of net lettable area.10.23% yield assuming on a fully leased basis.

Comparability: Superior commercial precinct to Gordon, however older stylebuilding with smaller net lettable area. Overall considered to besuperior.



2. Address: 32 Walker Street,North Sydney

Sale Price: $35,600,000

Sale Date: 24 June, 2011

Land Area: 601 m²

Building Area: 6,619 m²

Description: This property, known asChandler Macleod House,comprises a thirteen (13)level building with two (2)levels of basement carparking for 31 motorvehicles, ground floor andfirst floor tavern.

The building was completed circa 1988 and at the date of sale wassubstantially leased. This property is a well located North Sydneycommercial property, located with prime exposure to the cornerof the Pacific Highway and Blue Street, North Sydney, oppositeNorth Sydney Railway/Bus interchange. $3,417,600 passingrental.

Analysis: Sale shows $59,235 per m2 of site area.Sale shows $5,378 per m2 of net lettable area.Yield 9.6% not fully leased.

Comparability: Superior location with a higher rate per square metre resultingfrom ground floor tavern and retail accommodation.

3. Address: 40 Oxley Street,St Leonards

Sale Price: $12,208,077

Sale Date: 19 November, 2010

Land Area: 1,684 m2

Building Area: 3,030 m2

Description: This property is located on a corner site, and comprises a three (3)level office building with lower ground floor parking, and wascompleted in circa 1987.The building was subsequently internally refurbished in 2004 andcontains two (2) levels of ground floor and basement car parkingfor 64 vehicles and three (3) levels of office accommodation.The building was fully leased at the date of sale with a mix oftenants, and we understand that the sale transpired in an off-



market transaction, and was conditional upon a lease beingcompleted.

Analysis: Sale shows $7,249 per m2 of site area improved.Sale shows $4,029 per m2 of net lettable area.8.34% yield.

Comparability: Smaller premises than subject, similar corner highway location butoverall considered to be superior.

4. Address: 6-12 Atchison Street,St Leonards

Sale Price: $11,000,000

Sale Date: 30 November, 2010

Land Area: 1,035 m2


Description: This property is known as ‘Atchinson House’ and comprises a three(3) level commercial building with two (2) showrooms at streetlevel and basement parking for 23 motor vehicles.The building was completed circa 1985 and subsequentlyrefurbished in 1997, and has multiple tenants.A Development Application has been lodged with the Departmentof Planning for redevelopment of the site, for a mixedretail/residential development. However, the sales analysis iswithin the parameters for a sale of a commercial building of thisnature.

Analysis: Sale shows $10,628 per m2 of site area improved.Sale shows $3,829 per m2 of net lettable area.

Comparability: Smaller and inferior building to the subject, overall inferior.

5. Address: 42-44 Pitt Street,Sydney

Sale Price: $12,500,000

Sale Date: 11 May, 2011

Land Area: 347.5 m2


Description: This property is known as ‘Gerling House’ and comprises an eight



(8) level building which was originally constructed circa 1895 as afive (5) level warehouse, and subsequently extended to eight (8)levels in 1991.The property is classified by the National Trust and has a mix ofcommercial tenants.


Comparability: Smaller and inferior building to the subject, overall superior.

6. Address: 50 Berry Street,North Sydney

Sale Price: $29,262,910

Sale Date: 5 April, 2011

Land Area: 930.2 m2


Description: This property comprises a fourteen (14) level commercial officebuilding with basement car parking for 25 motor vehicles. Thebuilding was constructed circa 1984 and refurbished circa 1999,with floor plates of approximately 600 m2.The property has a mix of commercial tenants and was sold byExpression of Interest. We understand that the building was notfully occupied at the date of sale and therefore a yield would notbe representative of full occupation.


Comparability: Superior commercial precinct and building, overall consideredsuperior to the subject property.

7. Address: 8-20 Napier Street,North Sydney

Sale Price: $57,300,000

Sale Date: 20 July 2011(not yet registered)

Land Area: 1,503 m2


Description: This property, known as ‘NCR House’, comprises an eighteen (18)



storey building completed circa 1975.

Lower floors and foyer refurbished and external renovations to theforecourt were completed in 1998 at a cost of $18,000,000.In 2004, further upgrading to the building forecourt, new entrancecanopy and landscaping and façade, were undertaken.

Basement and open air car parking for 128 motor vehicles.This property has only recently been reported as having sold tothe Australian Catholic University which also occupies a largecampus in close vicinity to the subject property. It is expected thatthe building, which was 90% leased at the date of sale, willeventually be occupied by the Australian Catholic University, andtherefore is a good indication of a Special Value sale to an ownerin close proximity to the subject property.

Analysis: Sale shows $38,123 per m2 of site area improved.Sale shows $5,390 per m2 of net lettable area.8.75% yield.

Comparability: A larger and better located property than the subject property,overall considered superior.

Sales Summary

The following is an abbreviated commentary of the sales information:

Address Date Purchase Price Building Area Rate per m2 Yield

75 Miller Street,North Sydney

19.1.2011 $22,250,000 4,918.6 m2 $4,514 10.23%

32 Walker Street,North Sydney

24.6.2011 $35,600,000 6,619 m2 $5,378 9.6%

40 Oxley Street,St Leonards

19.11.2010 $12,208,077 3,030 m2 $4,029 8.34%

6-12 Atchison Street,St Leonards

30.11.2010 $11,000,000 2,873 m2 $3,829

42-44 Pitt Street,Sydney

11.5.2011 $12,500,000 3,410 m2 $3,666

50 Berry Street,North Sydney

5.4.2011 $29,262,910 6,739 m2 $4,342

8-20 Napier Street,North Sydney

20.7.2011 $57,300,000 10,630 m2 $5,390 8.75%



15.2 Site Sales

1. Address: 1-1A Carlotta Avenue,Gordon

Sale Price: $17,500,000

Sale Date: 7 April 2010

Land Area: 1.609 ha

Description: This property comprises a former Ku-ring-gai council depot sitewhich has substantial frontage to Pacific Highway, frontage toMona Vale Road and also frontage to Carlotta Avenue.

The site comprises a large irregular shaped site which falls fromPacific Highway and is located at the major Pacific Highway/MonaVale Road intersection. FSR 1.3:1

The site has been acquired by the Uniting Church in Australia forpotential medium density, retirement village style development.

Analysis: Sale shows $1,088 per m2 of site area.Sale shows $837 per m2 of FSR.

Comparability: Inferior.

2. Address: 3,5,9,11 McIntyreStreet, and,4,6,8,10,12 MerriwaStreet, Gordon

Sale Price: $17,150,000

Sale Date: 16 March 2009


Description: This property comprises a substantial amalgamated developmentsite, comprising ten separate residential allotments which wereamalgamated by Stockland Developments Pty Ltd, andsubsequently on-sold to Karimbla Properties (20) Pty Ltd.

This site is located directly opposite the subject property and wassold with the existing development approval.

Analysis: Sale shows $2,036 per m2 of site area.Sale shows $1,131 per m2 of FSR.

Comparability: Superior residential development site to the subject property as itis not located with direct highway frontage.



3. Address: 23 Lindfield Avenue,Lindfield

Sale Price: $2,750,000

Sale Date: 22 June 2006

Land Area: 486.9 m²

Description: An older part two and single level retail / office building locatedupon a corner site in close proximity to the subject property, andLindfield railway station.

This property is one of five (5) adjoining properties which havebeen purchased by the same purchaser as part of a larger siteamalgamation for future development.

Analysis: Sale shows $5,648 per m2 of site area improved.Sale shows $2,257 per m2 of FSR site area improved.

Comparability: Superior.


Sale Price: $10,000,000

Sale Date: 1st March 2006


Description: This property comprises a small neighbourhood shopping centrewhich has direct frontage to Lindfield avenue and rear lane accessto Havilah Lane.


The sale price indicates a high analysed rate per square metre ofsite improved and FSR due to the existing multi tenanted shoppingcentre which would provide a good cash flow to the purchaser,pending development approval.







Sale Date: 24 January 2007


Description: An older two level, narrow frontage retail with first flooroffice/residential having direct frontage to Lindfield avenue.






Sale Date: 2 February 2007


Description: An older two level, narrow frontage retail with first flooroffice/residential having direct frontage to Lindfield avenue.




The rental evidence we have externally inspected is as follows:



15.3 Rental Evidence

1. Address: Level 6, 33 Chandos Street, St Leonards

Tenant: Plate Marketing Pty Ltd

Area: 448 m2

Lease Term: Five (5) years

CommencementDate: September, 2010

Rental: $170,240 p.a. grossEquates to $380/m2 p.a. gross.

Reviews: Fixed Annual reviews at 4%.

Outgoings: Tenant responsible for a proportion of the increase in outgoingsover the base year.

Car Parking: Three (3) secure car spaces leased at $3,600 per car space perannum exclusive of GST and parking levies.

Comments: A refurbished building in close proximity to ‘The Forum’ and StLeonards Railway Station. We understand that the leasingtransaction was supported by a 20% incentive.


Tenant: Savv-e Pty Ltd

Area: 450 m2


CommencementDate: September, 2010


Reviews: Fixed Annual increases at 4%.

Outgoings: Tenant responsible for a proportion of the increase in outgoingsover the base year, estimated at $75/m2.

Car Parking: Four (4) secure car spaces leased at $3,600 per car space perannum exclusive of GST and parking levies.


3. Address: Levels 5 & 6, Tower ‘A’, 207 Pacific Highway, St Leonards

Tenant: Nextmedia

Area: 1,789 m2


CommencementDate: July, 2010



Rental: $822,940 p.a. netEquates to $460/m2 p.a. net.

Reviews: Fixed Annual increases at 3.5%.

Outgoings: Outgoings payable by the Lessee upon a proportion of the areaoccupied.

Incentives: Confidential but understood to be between 35-40% of grossincome.

Car Parking: Undisclosed

Comments: A good quality commercial building situated in close proximity to‘The Forum’ and St Leonards Railway Station.

4. Address: 70-76 Alexander Street, Crows Nest

Tenant: Screentime

Area: 770 m2

Lease Term: Ten (10) years

CommencementDate: May, 2011


Reviews: Fixed Annual increases at 4%.

Outgoings: Tenant responsible for a proportion of the increase in outgoingsover the base year.

Incentives: Unknown.

Car Parking: Ten (10) secure car spaces leased at $250 per car space percalendar month exclusive of GST and parking levies.

Comments: A three (3) level modern commercial building completed circa1988 comprising ground floor retail and upper levels ofcommercial office accommodation and parking for 22 motorvehicles.


Tenant: Undisclosed

Area: 339 m2

Lease Term: Three (3) years

CommencementDate: May, 2010


Reviews: Fixed Annual increases at 3.5%.

Outgoings: Payable by the Lessor.

Incentives: Understood to be circa 4 months’ rent free, in addition to anexisting fitout.



Car Parking: Secure tandem spaces at $2,160 per car space per annumexclusive of GST and parking levies.


Rental Summary

The following is an abbreviated commentary of the rental information:

Address Term Commencement Area Rate perm2 gross

Level 6, 33 Chandos Street, StLeonards

5 years Sept, 2010 448 m2 $380


5 years Sept, 2010 450 m2 $380

Levels 5 & 6, Tower ‘A’, 207Pacific Highway, St Leonards

5 years June, 2010 1,789 m2 $460 net

70-76 Alexander Street, CrowsNest

10 years May, 2011 770 m2 $350


3 years May, 2010 337 m2 $330

The above information has been obtained from a number of sources and is provided as a broad guideonly. Whilst we understand the information to be generally reliable, we are unable to guarantee theaccuracy. Since the introduction of GST from 1 July 2000, all sale contracts require the purchaseprices to be shown inclusive of GST, if it is applicable. For most properties sold with a lease in place,this would constitute a going concern and so GST is not payable. For all new residential apartmentsand the majority of non-residential property which is sold with vacant possession, the transfer pricewill include GST. As we assess a GST exclusive value, we use our best endeavours to ascertainwhether our primary sales are inclusive or exclusive of GST.

16. BASIS OF VALUATION

We have been instructed to value the subject property on the following three (3) bases:

BASIS 1 – Current Market Value of the Building Excluding Ground Lease

BASIS 2 – Market Value of the Subject Property based on its Current Rental Profile and IncomeStream including Council’s Ground Lease Income

BASIS 3 – Special Value to Ku-ring-gai Council as an Adjoining Owner



We have assessed the value of the subject property on the basis of freehold title, subject to theexisting tenancies.

The Australian Property Institute has adopted the International Assets Valuation StandardsCommittee definition of Market Value:

”Market value is the estimated amount for which a property should exchange on the date ofvaluation between a willing buyer and a willing seller in an arms length transaction, after propermarketing, wherein the parties had each acted knowledgeably, prudently and withoutcompulsion.”

Included in the amount of this valuation are normal fixtures, fittings, and building services.

This valuation is determined on the basis that the property, the title thereto and its use is notaffected by any matter other than that mentioned in this report.

In assessing our market value of the subject property, we have also assumed that should theproperty be sold, suitable marketing resources would be provided in exposing the propertyadequately to the market to achieve a sale.

17. VALUATION APPROACH

Outgoings

We have been provided with schedules of the outgoings from the Property Manager whichindicates the following:

Actual Year Ending 30 June2011

Projected for Year Ending 30June 2012

$ Value $/m2 $ Value $/m2

Statutory Outgoings $115,567 $16 $120,532 $16

Insurance $0 $0 $0 $0

Air Conditioning $31,438 $4 $32,477 $4

Cleaning $70,661 $10 $87,341 $12

Building Supervision $44,123 $6 $46,555 $6

Car Park $0 $0 $0 $0

Electricity $181,845 $24 $210,535 $28

Gas & Oil $0 $0 $0 $0

Fire Protection $13,835 $2 $12,906 $2

Lifts $23,405 $3 $25,852 $3

Pest Control $1,577 $0 $2,059 $0

Repairs & Maintenance $55,561 $7 $50,560 $7



Actual Year Ending 30 June2011

Projected for Year Ending 30June 2012

$ Value $/m2 $ Value $/m2

Emergency Generators $0 $0 $0 $0

Energy Systems/BAS $0 $0 $1,200 $0

Security $25,360 $3 $22,932 $3

Gardening $12,720 $2 $12,360 $2

Building Management $38,729 $5 $39,273 $5

Consultants $13,550 $2 $7,940 $1

Total Outgoings: $628,371 $84 $672,523 $90

Note: There is no amount allocated for insurance and we have made an allowance of $25,000 perannum.

17.1 Current Market Value of the Subject Building excluding Ground Lease

In undertaking the valuation of the subject property we have primarily relied upon theCapitalisation of Net Income approach, and as a supportive approach we have adopted the DirectComparison approach.

Capitalisation of Net Income approach

The Capitalisation of Net Income basis of valuation for the subject property entails the followingprocess:

We have adopted the gross maintainable income from the property and deducted thestatutory and operating expenses which are based on both actual (past year’s outgoings) andprojected expenses for the Year Ending 30th June, 2012.

After deduction of the outgoings we have estimated the net maintainable income of theproperty.

We have then capitalised the net annual income at a yield which we consider appropriate fora property of this nature, age, and within this locality.

From the Capitalised value, we have added any Present Value (PV) of rental overages (wherethe passing rent is considered to be in excess of the market rent) until the time of the nextreview, and

We have then deducted any estimated PV of rental shortfalls which relate to vacant tenancyareas and where the passing rental is considered to be less than the market rental.



We have also deducted agent’s leasing fees and incentives in relation to current vacanttenancy areas and pending vacancies. We have adopted 13% of the gross rental as adeduction for the agent’s leasing fees and the relevant incentives have been shown withinthe financial calculations annexed to the rear of our report.

Generally, we have allowed for incentives of 12 months.

Our valuation calculations, in brief, are as follows:

Estimated Gross Market Rental: = $3,179,801Less:Actual and Estimated Statutory Outgoings and Operating Expenses: = $697,522

$2,482,279

Capitalised @ 9.5% = $26,129,248

Add:Present Value of Rental Overages: = $210,581

$26,339,829Less:Estimated Present Value of Rental Shortfalls: = $4,440

$26,355,389

Less:Leasing Up Allowance: $2,330,634Incentives: $2,118,713Agent’s Leasing Fees: $ 314,940 = $4,784,287

$21,571,102

Adopt: $21,570,000

Direct Comparison approach

This approach has been adopted as a Supportive Approach to the Capitalisation of Net Income,and involves a comparison of rates per square metre of net lettable area analysed from sales ofcommercial properties.

There are no recent sales of similar size and aged commercial properties within the immediatesurrounding locality of the subject property, and accordingly we have undertaken sales searchesfor recent sales transactions within other metropolitan commercial precincts.

The sales evidence indicates the following ranges:

Dates of Sale: 19.11.2010 to 20.7.2011

Purchase Prices: $11,000,000 to $57,300,000

Rate per m2 of Net Lettable Area: $3,666/m2 to $5,578/m2

Yields: 8.34% to 10.25%



Based upon the age, lease expiry profile and nature of improvements and location of the subjectproperty, we are of the opinion that the subject property, which has a total net lettable area of 7,436.4 m2 at $2,850/m2 of Net Lettable Area, = $21,193,740, adopt: $21,200,000.

Reconciliation of Valuations

Our Capitalisation basis provides a rounded value of $21,570,000,

Our Direct Comparison approach provides a rounded value of $21,200,000, and

We have adopted $21,570,000 as our value of the subject property.

17.2 Special Value to Council

We note that Council has a leasehold interest over the land which is due to expire on 25th August,2090, which is an unexpired period of 79.15 years from the date of valuation until the date oflease expiry.

Lessor’s Interest

The Lessor’s interest is the sum of the present value of the future cash flow for the remainingterm of the lease, and the reversion of the land value deferred for the term of the lease.

We note that the current ground rental, i.e. as at August 2011 being paid is based on 17.5% of thenet income of the existing improvements and is estimated at $181,316 per annum. The remainingperiod of the lease which is due to expire on the 25th of August 2090 is estimated (rounded to) at79.15 years.

From the schedule provided to us by Council, it is apparent that the actual amount of groundrental fluctuates significantly from year to year, and for the purposes of assessing an annualrental, we have averaged the last four (4) years’ rent which has been paid, which provides anaverage rental of $282,201 per annum.

Therefore the leasehold interest is the present value of $282,201 per annum for 79.15 years at aninterest rate of 9% which equates to $3,132,150.

This theoretically is the present value of the cash flow to Council without any fluctuations forincrease or decrease of the rental stream over the unexpired period of the term.

Based on the sales evidence noted in our report, we are of the opinion that the freehold value ofthe site is as follows:

4,182 square metres at $1,600/m2 equals $6,691,200.

Therefore the reversionary interest in the land to Council is the present value of $6,691,200deferred 79.15 years at 9% which amounts to the sum of $7,298. Therefore, the Lessor’s interest(Council) is the present value of the cash flow for the remaining tenure of the lease term, togetherwith the present value of the reversionary interest of the land to Council upon the expiration ofthe lease.



Present value of cash flow: = $3,132,150

Reversionary interest: = $7,298

Total: = $3,133,448

Adopt: = $3,140,000

17.3 Current Market Value of the Subject Building including the obligation to pay theGround Lease to Ku-ring-gai Council

Our valuation calculations, in brief, are as follows:

Estimated Gross Market Rental: = $3,179,801

Less:Actual and Estimated Statutory Outgoings and Operating Expenses: = $697,522

$2,482,277

Capitalised @ 9.5% = $26,129,248

Add:Present Value of Rental Overages: = $210,581

$26,339,829

Less:Estimated Present Value of Rental Shortfalls: = $4,440

$26,355,389

Less:Leasing Up Allowance: $2,330,634Incentives: $2,118,713Agent’s Leasing Fees: $ 314,940 = $4,784,287

$21,571,102

Less:Council’s interest in the ground lease: = $3,140,000

$18,431,102

Adopt: $18,430,000

Ground Rental

It is our opinion that the ground rental being derived from the property would have limited appealgiven that the rental fluctuates significantly from year to year and therefore does not provide areliable income stream. It is not reflective of its market rental value of the land. Council couldtransfer its Lessor’s interest to an independent party, however we are of the opinion that it ishighly unlikely that such a party could be found within the current property market withouthaving to provide a substantial discount to the amount indicated by our calculations outlinedabove, in order to effect a sale.



Accordingly it is our opinion that it would be preferable for Council to negotiate with the existingLessee rather than try to secure a third party to take on an assignment of the existing leasearrangement, or alternatively, purchase the property.

Based on the valuation figures above, we are of the opinion that the value of the subject propertyreflecting the ground lease is $18,430,000.

Special Value to Ku-ring-gai Council as an adjoining owner and holder of the ground lease

In respect to the Special Value we believe that Council could justify paying a premium of between10% to 15% over and above the assessed market value subject to the ground lease i.e.$18,430,000, which would equate to a range of $20,275,000 to $21,200,000.

It is difficult to assess an accurate Special Value component, as there are a number of reasons whypurchasers will pay a premium over and above a market value.

Accordingly, it is a commercial decision for the purchaser, which reflects the special need toacquire that property, over other properties in the market, to determine what premium isattributable to the purchase price.

Building Structure

Our valuation assumes that the building structure, services and amenities, are adequate for thenormal operation of a commercial office building.

As noted previously within this report, there are cracks within the basement car parking levelswhich need to be inspected by a suitably qualified Structural Engineer.

We also strongly recommend that Council undertakes due diligence reports in respect to thestructure adequacy of the existing building, and the services, particularly including airconditioning and lifts.

We note that GE intended to upgrade the lifts in November, 2011, and this could be abargaining point for Council to assume that these works will be carried out in a satisfactorymanner to Council’s requirements, and comprise part of the purchase price adjustment.

18. MARKETABILITY PROFILE

Very Good

Good

Average

Poor

Based upon an adequate marketing budget, commensurate with the nature of the subjectproperty and normal agent expertise, we believe that a marketing period to achieve the valuationis between four (4) to eight (8) months.



Taking into consideration the comments contained within this report, the local market dynamicsand the nature of the subject property, we believe that the property has the ability to sustain itsvalue in the future and should generally perform commensurate with the general real estatemarket.

18.1 Pecuniary Interest

We hereby certify that Paul McBurnie and BEM Property Consultants Pty Ltd does not have anydirect, indirect or financial interest in the property or the Clients described herein, which wouldprovide a biased opinion of value.

19. COMPANY QUALIFICATIONS

This valuation has been properly prepared on specific instructions from Ms Deborah Silva,Manager – Strategic Assets and Property Services, on behalf of Ku-ring-gai Council and may onlybe relied upon for asset purposes.

This valuation is current as at the date of valuation only. The value assessed herein may changesignificantly and unexpectedly over a relatively short period (including as a result of generalmarket movements or factors specific to the particular property). We do not accept liability forlosses arising from such subsequent changes in value. Without limiting the generality of theabove comment, we do not assume any responsibility or accept any liability where this valuationis relied upon after the expiration of 3 months from the date of the valuation, or such earlier dateif you become aware of any factors that have any effect on the valuation.

The report is not to be relied upon by any other person or for any other purpose. We accept noliability to third parties nor do we contemplate that this report will be relied upon by third parties.We invite other parties who may come into possession of this report to seek our written consentto them relying on this report. We reserve the right to withhold consent or to review the contentsof this report in the event that our consent is sought.

DATE OF INSPECTION

22nd July, 2011

DATE OF VALUATION

22nd July, 2011



20. VALUATION

WE HAVE ASSESSED THE VALUE OF THE SUBJECT PROPERTY BEING 828 PACIFIC HIGHWAY,GORDON AS AT 22ND JULY, 2011 AND SUBJECT TO THE DETAILS REFERRED TO HEREIN, AT:

BASIS 1 – CURRENT MARKET VALUE OF THE BUILDING EXCLUDING GROUND LEASE:

TWENTY ONE MILLION FIVE HUNDRED AND SEVENTY THOUSAND DOLLARS:................................................................................................................... $21,570,000

BASIS 2 – MARKET VALUE OF THE SUBJECT PROPERTY BASED ON ITS CURRENT RENTAL PROFILEAND INCOME STREAM INCLUDING COUNCIL’S GROUND LEASE INCOME:

EIGHTEEN MILLION FOUR HUNDRED AND THIRTY THOUSAND DOLLARS .. $18,430,000

BASIS 3 – SPECIAL VALUE TO KU-RING-GAI COUNCIL AS AN ADJOINING OWNER:

TWENTY MILLION TWO HUNDRED AND SEVENTY FIVE THOUSAND DOLLARS TOTWENTY ONE MILLION TWO HUNDRED THOUSAND DOLLARS: ...............................................................................................................................$20,275,000 TO $21,200,000

Note: These valuation ranges exclude GST

Per:

Paul McBurnie FAPI CPV CPP Steve EcclestonRegistered Valuer No. 164 DirectorDirector BEM Property Consultants Pty LtdBEM Property Consultants Pty Ltd

Note:The person who appears as the second signatory on this report has not inspected the subject property, norphysically inspected the sales evidence within this report. However the report has been checked as part ofour internal quality assurance requirements for risk management.

valuation report - ku-ring-gai council · 2014-04-10 · valuation report 828 pacific highway,...

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