APN STELLER DEVELOPMENT FUND

For wholesale and sophisticated investors only.

Having already achieved significant land settlement and planning milestones, the APN Steller Development Fund will develop six inner Melbourne medium density apartment projects targeting the strong demand from existing home owners who are looking to release equity and move into large affordable apartments.
Steller is a full service property development and construction company, which specialises in delivering over sized apartments that cater for the growing downsizer baby boomer market, with a particular focus on owner occupiers. With an established reputation for quality, Steller has completed a pipeline of projects in excess of $500 million since 2006.

The partnership

  • APN has entered into a development partnership with Steller, thereby receiving the benefit from their low cost development and construction delivery capability.
  • The partnership will develop 223 apartments1 over 6 Medium Density Projects in South East Melbourne (St Kilda, Armadale, McKinnon, Highett and Cheltenham).

Expected return and key features

  • Target equity investment rate of return 18% pa (pre tax and post all fees)2
  • Target equity multiple >1.5 times (post tax, with benefit of franking credits)3
  • No debt at the Fund level; construction funding on a non recourse basis at an individual Project level only.
  • Capital at risk minimised through requiring end apartment sales to cover costs before construction commences.

Investment opportunity

Structure Unregistered managed investment scheme
Term 7 years, with Seed Projects to be developed over 4-5 years
Application Minimum $500,000 (subject to APN’s discretion)
Investor type Wholesale Clients (as defined in the Corporations Act) in Australia
Fund size $18.1 million in equity raised
APN co investment $2 million on the same terms and conditions as Investors
Trustee & Manager APN Funds Management Limited

Risk mitigation

  • Structured to minimise capital at risk to initial site purchases before apartment pre-sales are achieved.
  • Medium density only projects located in Residential Growth zones in close proximity to transport and amenity.
  • Planning risk mitigated further with each project already in planning.
  • Construction time / risk is mitigated given relatively small size of each project and the strict cost parameters supported by Guaranteed Maximum Price build by Steller based on Quantity Surveyor certifications.
  • Sales risk is mitigated given relatively small size of each project and delivery parameters that pre-sales must cover a minimum of project debt before construction commences.
  • The sale assumptions are reasonable with affordable apartment pricing at ~$8,000 psm on average with strong demand from target market downsizing owner occupiers.
  • Land value supported by independent valuations.
  • Steller delivery guarantee – any capital losses on a project are guaranteed 50 cents in the dollar by Steller.
  • Steller, as the Joint Venture partner has considerable specific experience and expertise along with a demonstrated track record.

NB – All capitalised terms are referenced in the Information Memorandum (IM).

The APN Steller Development Fund is still available for additional investment. Target equity investment rate of return 18%pa2.

For more information on the Fund, please contact investor services.

1. Forecast number of apartments. The number of apartments may change during the delivery of each Project.

2. Initial target investment rate of return. This target will be subject to property, financing and other general risks. Any target return will not be guaranteed.

3. Post fees. Forecast distributions are subject to a number of assumptions and risks. Investors should read a copy of the Information Memorandum before deciding to invest. Forecast returns not guaranteed.

Important Information
This information  has been prepared without taking into account your objectives, financial situation or needs and you should consider if the information is appropriate for you before making an investment decision. Before making any investment decision on the basis of any information provided you must read the relevant Information Memorandum (IM) issued by APN Funds Management Limited (APN) and make your own investigations regarding the accuracy, reliability and completeness of this information. The IM referred to can be downloaded from the hyperlink contained above or by visiting apngroup.com.au or by contacting APN on (03) 8656 1000.  You should consider the IM for APN’s financial products before making a decision about APN’s financial products.  All views expressed and all projections, forecasts or statements relating to expectations regarding future events or possible future performance of the Fund represent APNFM’s and Development Manager’s assessment and interpretation of information available as at the date of the IM (6 July 2015). No representation is made or assurance given that such statements views, projections or forecast are reasonable or correct or that the objectives or prospective returns of the Fund will be achieved. Recipients and intending investors must determine for themselves what reliance (if any) they should place on such statements, views, projections or forecasts and no responsibility is accepted by the APN Steller JV Group. Intending investors are strongly advised to conduct their own due diligence.

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