PEAK CHILDCARE PROPERTY TRUST NO.1

PEAK

CHILDCARE

TRUST

MARCH 2021

Diversified Portfolio Of Childcare Assets

15 Year Secure Leases

7%+ Income Paid Monthly

WHY PEOPLE CHOOSE PEAK EQUITIES

Communication and Information

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The Trust - Investors are invited to apply for Ordinary Units in the PEAK CHILDCARE TRUST (Trustee, Peak Equities Pty Ltd). The total value of the Ordinary Units to be allotted pursuant to this Offering is $11 million (eleven million dollars in 11,000 Units of $1,000 each).

The Peak Childcare Trust (“the Trust”) owns 100% of the Units in the PEAK CHILDCARE PROPERTY TRUST NO. 1 (“Trust No. 1”). The principal activity of Trust No.1 is the derivation of rental income from ownership of three Childcare centres:

•Wallaby Childcare: 209 Black Forest Rd, Werribee VIC

•Lead Childcare: 7001 Muller St, Walloon QLD

•Little Peoples Place: 81 Scarborough Beach Rd, Scarborough WA.

Due Diligence - Peak Childcare Holdings Pty Ltd, trustee of Trust No. 1 has undertaken and completed detailed Due Diligence investigations in relation to each of the three Childcare Centres.

Application of Proceeds - The Peak Childcare Trust will apply the proceeds of the capital raising (less Establishment Fees) to the purchase of Ordinary Units in the The Peak Childcare Property Trust No 1.

Purchase Price - The aggregate purchase price of the three properties is $17,950,000 (see details of each property in the ‘Property & Tenant Details’ section

Funding - Peak Childcare Holdings Pty Ltd has negotiated interest-only first mortgage funding from CBA at a 50% LVR, on a non-recourse basis to investors. The forecast variable interest rate is between 2.05% and 2.1% p.a. (based on 90 day Swap rates at the date of preparing this IM).

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Liquidity - The Trustee undertakes that Investors in the Trust will be entitled to exit their investment at full market value at any time after the 6th anniversary of the establishment of the Trust.

Forecast Distribution Rate - The Trustee proposes to make monthly cash income distributions to investors commencing at the rate of 7% per annum and increasing to 8% over the holding term.

Applications for Units - Each Investor may apply for between 100 and 750 Ordinary Units of $1,000 each in the capital of the Trust (Investment Value $100,000 to $750,000). Applications may only be made on the Application Form attached to this Information Memorandum.

Population

The Australian Bureau of Statistics (ABS) has estimated the City of Wyndham’s population as of 2019 to be approximately 276,000 and the Wyndham/Werribee locality within the city, to be approximately 65,000. Further, they estimate that from 2010 to 2019, the City of Wyndham’s population grew by 74% (ranking it first in the state and fourth highest of all Municipalities in Australia), such is the level of development and growth.

The fees of the subject Centre, which are set at approximately $112 per day, are within but at the low end of market parameters and offer the scope for future growth without impacting occupancy levels.

ABS forecasts indicate that the likely population growth is expected to continue at a pace well above the State and National averages.

Forecast id is a reputed resource for forecasting demographic trends, drawing their information from their own research and data provided by more than 130 local Councils. Their forecast population Growth estimates for the Wyndham Vale region demonstrate that the population in the age brackets most relevant to Childcare requirements will increase significantly during the period 2016 to 2041. Extracts from their analysis disclose the following estimated increases:

•Population aged 30–34 years (young parents) increasing from 1,800 to 9,500.

•Children aged 0-4 years increasing five-fold from 1,800 to

10,100.

•Children aged 5-9 years increasing by a similar factor from 1,600 to 9,700.

Lease Terms

The property was purchased in an off-market transaction from an associated company of the operator. The initial lease term is 15 years, commencing 1st July 2020, with two further option periods of 10-years each. Rental increases by 3% each year, and investors will benefit from an early increase in July 2021.

All property outgoings, other than land tax, are payable by the tenant. The property was purchased on a year-1, net income yield of 5.89%, after allowing for land tax payable by the owner.

Significantly, the total rent payable is below $3,000 per licensed place, which is at the lower end of market rentals

for Victorian centres, providing sound upside when rates are reviewed on expiry of the initial lease term. Additionally, the modest rental per place reduces the financial burden on the Operator, enabling them to attract patrons with lower daily rates.

The Operator

Wallaby Childcare is a highly experienced, privately owned and operated early education provider with broad experience in all aspects of children’s care. The Centre is assessed by the State and Federal authorities to be meeting all regulatory requirements and educational standards.

The Centre was established by companies associated with Mr. Brian Stynes, forming part of the well-reputed “Wallaby Childcare” group. Brian has been in the Childcare industry for a considerable time and has operated multiple centres with a reputation for success. At present he operates 4 centres all of which are in Victoria. They are located at Greensborough, Epping, Sanctuary Lakes, and the subject Centre. A fifth Centre is being constructed at Wollert and is planned to open early in 2021.

Wallaby Childcare Werribee achieved operational occupancy in the high 80% zone for the month of January 2020, which increased further through the first COVID lockdown. This success is indicative of sound business practices and strong market acceptance, during what has been a turbulent period. These occupancy rates appear even more impressive, considering the large number (149) of licensed places at Wallaby Childcare Werribee.

Demographics

Location

LEAD Childcare Walloon is prominently positioned in a developing residential precinct within a modern master planned estate covering 185 hectares and will contain approximately 1,800 lots on completion.

Walloon is an emerging outer suburb of Ipswich, located only 9 km from the city centre, contained within the Greater Brisbane Area.

The Greater Ipswich area was assessed by the Queensland Government’s Statistician as the fastest-growing Local Government Area (LGA) during the decade up to 2019.

Existing competition is almost non-existent until the catchment is expanded to a radius of 7.5km. The Walloon property is generally better located than the competition and will be the immediate beneficiary of population growth in Walloon.

Population

Data from the Australian Bureau of Statistics identifies children aged 0-9 years making up the largest percentage (17%) of the Ipswich LGA, with adults (likely parents) aged between 25 to 34 years of age accounting for a further 15% to 16% of the population.

The fees of the subject Centre, which are initially set at approximately $100 per day, are within market parameters.

These are relevant statistics supporting the location of a new Childcare investment. The local area population is not affluent and hence the daily fees have been set at around $100 per day, requiring an out-of-pocket contribution for most families of less than $15 per day.

Relatively low-income areas attract young families, offering affordable land and house prices. They also offer an opportunity for strong value growth as the population becomes more affluent over time.

Forecast id estimates that the total population of the Ipswich LGA will increase from approximately 200,000 in 2016, to almost 500,000 by 2036.

Lease Terms

The property was purchased in an off-market transaction, approximately 3 months before completion. We have established a constructive working relationship with the Tenant.

The initial lease term is 15 years, commencing 1st January 2021, with two further option periods of 5-years each. Rental increases by a strong 3.5% each year.

All property outgoings including land tax, are payable by the tenant. The property was purchased on a passing net income yield of 5.95%. Most significantly, the total rent payable is $2,275 per licensed place. That rental creates a strong upside potential when rates are reviewed on expiry of the initial lease term, and importantly, reduces the Operator’s cost structure, enabling them to attract patrons at lower daily rates.

The Operator

LEAD Childcare is a highly regarded and reputable childcare operator with over 15 locations across Queensland. State-of- the-art facilities and sustainable practices are embedded in their operations. Their business practices are sound, focusing on lower-cost Centres attracting a high occupancy rate.

The LEAD Group is currently engaged in a programme of steady expansion, including proposed developments outside Queensland.

The Lead Group is associated with Ms Nina Hefford. We are advised that enrolments have reached 60% of full occupancy within 3 months of opening, which we consider a strong result. Conservative forecasters generally allow 9-12 months to achieve occupancy in excess of this level.

Demographics

Location

Scarborough is an affluent, predominantly residential suburb located in Perth’s northern suburbs, approximately 10 km north-west of the Perth CBD. Dominated by its beach access that extends along the suburb’s western alignment, Scarborough has a defined beach driven nature and appearance. In recent years there has been considerable redevelopment of land away from older low scale improvements toward more intense land uses.

The location, within a comfortable travelling distance of the Perth CBD is attractive to those seeking lifestyle within proximity of major employment sources. Travel time to central Perth by car in medium traffic levels is estimated at 15-19 minutes via the Mitchell Freeway.

Overall, the location exhibits metrics that indicate a strong demographic profile that where there is an acceptable balance between demand and supply, should support a new childcare centre.

Population

The average age at the most recent census was 34 years old (vs. Australia at 38) reflecting a younger demographic than both Western Australia and nationally.

The 2016 Census assessed median household income to be $1,868 per week (the national average was $1,438). This places the Scarborough Beach LGA clearly within the upper range of affluent suburbs in WA.

The population of Scarborough is forecast to grow by more than 20% over the next 10 years, representing a growth rate of 2.07% per annum, well ahead of forecast national growth of 1.5% p.a.

The current supply of long day care childcare places in Scarborough is approximately 1 place per 11 children under the age of 6. This level of under supply supports the sustainability of rents and viability of quality operators, and also allows for the opening more centres in the immediate catchment area without adversely affecting demand for existing operators.

Lease Terms

The commencing rental payable by the Childcare operator is $3,750 per licensed place. This is an appropriate rental for an affluent demographic like Scarborough.

The Childcare Lease will run for 15 years until October 2035. Initial rental will be $300,000, with the tenant paying all outgoings. The Lease provides for one option period of 10 years from 2035 to 2045. Annual rental increases are 3% per annum, with a market review at the conclusion of the first 15-year term.

The fees of other childcare operators in the vicinity are generally in the $125-$143 range per day. At a rental payable under the lease, equivalent to $3,750 per place, the Centre should be able to operate profitably, offering daily rates and that are competitive within its catchment area.

A new competing Centre is in the planning stages in close proximity to the subject Centre. Both Operators are confident that the local catchment of pre-school-age children can support both Centres.

Approximately 8% of the lettable building area is leased to a Brazilian-style café/restaurant for a period of 5 years with one further 5 year option. The café is complementary to, but independent of the Childcare operation. Initial “net” rental will be $45,000 per annum. While the café lease expires before the childcare lease, the risk of future vacancy is mitigated to a degree by direct discussions Peak have had with the Childcare operators, who indicated they are prepared to take over the Café area at any time, for use as their Head Office.

The Operator

Little Peoples Place is a well-reputed Perth Childcare operator. Their stated goal is to help cultivate curiosity, confidence and a love of learning in the children they work with.

This corporate philosophy is carried through to good effect, with the Group’s Centres receiving industry awards and achieving ratings ‘Exceeding’ a number of the quality standards set by the regulating authorities.

All Little Peoples Place Centres are closely managed by a husband-and-wife team. Their growth has been steady, without challenging the quality of their management policies and practices.

Investor Equity Required

11,000,000

Net Income Yield (inc. Founder Units)

6.74%

7.04%

7.33%

7.65%

7.96%

8.29%

8.63%

8.98%

Category

Establishment Fee

Interests associated with the Manager have

Carried Interestbeen allotted 240 Founder Units in the capital of the Trust.

Founder Units are entitled in aggregate to 3.25% of the income and capital of the Trust.

Syndicate Management Fees

Paid monthly to Peak Childcare Management Pty Ltd for managing the assets and all of the activities of the Trust and the interests of Unitholders. Calculated by reference to the Total Asset Value of the Trust.

0.50% of the Total Asset Value of the Trust (as defined in the Trust Deed)

Interests associated with the Manager have

Capital Gainsbeen allotted 240 Special CG (capital gain) Units in the Trust.

Special CG units will be entitled in aggregate to 20% of the capital gains available to Unitholders following sale of the investment property/ies

Risk Factors

Intending Investors should be aware of the following

risks associated with an investment in the Trust and are advised to seek independent advice before committing to an investment in the Trust.

General Investment Risk and Specific COVID-19 Risk

Whilst the revenue forecasts provided in this Information Memorandum have been carefully formulated based on current market conditions and reasonable assessment of future conditions, unforeseen or uncontrollable circumstances may arise during the term of the Trust which adversely affect the projected income streams and/or future capital values. There is no guarantee the financial forecasts in this IM will be achieved. There are a number of risk factors, including uncertainties associated with the Coronavirus pandemic, which could impact

on the projected income, the tax effectiveness of any distributions, and the return of capital or capital growth.

An investment of this nature carries a certain level of commercial risk, and the performance of the Trust may be affected by a number of factors, many of which are outside the control of the Manager. Some of the significant risks and the way the Manager aims to manage those risks are set out below. Please note the Manager cannot eliminate all risks and cannot promise that the way it manages them will always be successful.

Liquidity Risk

Units in the Trust will be illiquid for a period of six years, and during that time they may not be readily saleable.

The Manager has no obligation to purchase or redeem Units during the first 6 years of the life of the Syndicate. There is no established secondary market for Units and transfers may only be affected in accordance with the Trust Deed.

Property Risks

Property investment by its nature involves risk. The Trust will be investing in the Peak Childcare Property Trust No 1, which will, in turn, invest in Childcare freehold assets. The Manager cannot guarantee the continuous occupancy of each property, nor the income available for distribution to investors. Neither can the Trustee or the Manager warrant that the eventual sale of the property will generate capital gains to the investors.

Insurance risks

The Manager will insure the Property for full replacement value. However, the circumstances of a particular

loss or the specific provisions of the insurance policy may preclude a claim being accepted by the insurer. Additionally, there is a risk that the insurance money received may not be adequate to compensate the Trust.

Forecasting risks

The Manager does not guarantee the indicated earnings and rate of distribution set out in this IM. Investors should make their own reasonable enquiries and form an independent opinion of the future performance of the Trust. The forecast financial information has been derived from financial models which have been developed

by the Manager. There is a risk that the models may not be accurate as a result of one or more incorrect assumptions. Assumptions are generally only a best estimate at a point in time.

Borrowing risks

The Peak Childcare Property Trust No 1 will partially fund the purchase of the properties with debt. There is no guarantee the debt funding will ultimately be made available by the bank. The Manager will be required to meet various conditions before the funding can be drawn down. If the debt funding is not provided the Manager will need to seek an alternative lender and/ or raise additional equity.

Debt funding will be secured against the Property, with no recourse to investors. A default under the terms of the loan may lead to the financier exercising its security and selling the Property for a price lower than that which might have been achieved in normal circumstances. This may have a negative impact on the performance of the Trust and potentially a loss of investors’ capital.

Additional Information

MATERIAL CONTRACTS

The following is a summary of documents significant or material to the Fund and its activities. This section only contains a summary, which means that all the provisions of each material document are not fully described.

Copies of material documents (subject to excluding confidential commercial terms) may be requested from Peak Equities Pty Ltd.

1. Purchase Contract

The Peak Childcare Property Trust No 1 has purchased the properties at Werribee (on 16th November 2020) and Walloon (on 21st December 2020). The Purchase contract for the Scarborough property is in the final stages of preparation and will be executed upon completion of Due Diligence. Settlement is expected to occur on or before 31st March 2021.

Peak Equities Pty Ltd has funded the purchase of the Werribee and Walloon properties from private resource and mortgage advances from CBA. Ordinary Units will be issued to Investors on the day following the date of Settlement of the Scarborough Property. From that date, the rental income from all assets will accrue for the benefit of Investors.

2. The Trust Deed

2.1The Peak Childcare Trust was created on September 1st 2020, and varied by Supplemental Deed dated 1st February 2021, with Peak Equities Pty Ltd

as trustee. The Founder Unitholders and Special CG Unitholders are Arrabri Nominees Pty Ltd, as trustee for the Borsky Family Trust; Killila Property Group Pty Ltd as trustee of the Killila Discretionary Trust; and TTS (Retail) Pty Ltd as trustee for the D Borsky Family Trust and TP & N Borsky as trustees for the T & N Borsky Superannuation Fund.

The entitlements of the special classes of Units are as follows:

Founder Units are issued at $1.00 each. Following the allotment of Ordinary Units, Founder Unitholders will be entitled, in aggregate, to receive 3.25% of all distributions of income and capital of the Trust.

Special CG Units are issued at $1.00 each. The Special CG Unitholders are entitled, in aggregate, to receive 20% of the value of capital gains available to Unitholders, as defined in the Trust Deed. They do not have voting rights and have no entitlement to share in distributions of either the income or the capital of the Trust.

2.2 The Manager

Pursuant to Clause 24.2 of the Trust Deed, the Trustee shall be authorised and obliged to pay to the Manager monthly Management Fees and Establishment Fees in consideration of management services to be provided by the Manager on behalf of the Trust.

The Manager is Peak Childcare Management Pty Ltd, acting as trustee for the Peak Childcare Management Trust.

The Management Fee payable is an amount per annum equal to 0.5% of the Total Asset Value, calculated and payable monthly in arrears.

The Establishment Fee is an amount equal to 3.0% of the total acquisition cost of the Property (including all costs and applicable Taxes) payable upon settlement for the purchase of the Property.

2.3The Peak Childcare Property Trust No 1 was created on December 12th 2020, with Peak Childcare Holdings Pty Ltd as trustee. The sole Unitholder of The Peak Childcare Property Trust No 1 is Peak Equities Pty Ltd as trustee for the Peak Childcare Trust.

The Peak Childcare Property Trust No 1 is the owner of the freehold Childcare properties and the mortgagor under the first mortgage provided by CBA Bank.

Copies of the Trust Deeds may be provided to Unitholders, subject to execution of a non-disclosure agreement, upon receipt of a written request.

DISCLOSURE OF INTERESTS

Investors are made aware that the Directors and other officers of Peak Equities Pty Ltd are directors, shareholders and beneficiaries in the below-listed entities which are the subject of commercial dealings with the Trust:

1.Peak Childcare Management Pty Ltd (Manager of the Trust, acting as trustee for the Peak Childcare Management Trust). Interests associated with the directors of Peak Equities Pty Ltd are the holders of Founder Units and Special CG Units in the Peak Unit Trust and Ordinary Units in the Peak Childcare Management Trust.

2.Arrabri Nominees Pty Ltd as trustee for the Borsky Family Trust, is an initial holder of Founder Units in the Peak Childcare Trust. Arrabri Nominees Pty Ltd is associated with Tom Borsky, a director of Peak Equities Pty Ltd and Peak Childcare Management Pty Ltd. Tom Borsky is also a director of Peak Childcare Holdings Pty Ltd. The Borsky Family Trust is a beneficiary of the Peak Childcare Trust and the

Peak Childcare Management Trust.

3.Tom and Nuritt Borsky, in their joint capacity as trustees for the T&N Borsky Superannuation Fund, are initial holders of Special CG Units in the Peak Childcare Trust.

4.TTS (Retail) Pty Ltd, as trustee for the D Borsky Family Trust, is an initial holder of Founder Units and Special CG Units in the Peak Childcare Trust. TTS (Retail) Pty Ltd is associated with David Borsky, a director of Peak Equities Pty Ltd and Peak Childcare Management Pty Ltd. David Borsky is also a director of Peak Childcare Holdings Pty Ltd. The D Borsky

Family Trust is a beneficiary of the Peak Childcare

Trust and the Peak Childcare Management Trust.

5.Killila Property Group Pty Ltd as trustee of the Killila Discretionary Trust, is an initial holder of Founder Units and Special CG Units in the Peak Childcare Trust. Killila Property Group Pty Ltd is associated with Mr James Weaver, a director of Peak Equities Pty Ltd. and Peak Childcare Management Pty Ltd. James Weaver is also a director of Peak Childcare Holdings Pty Ltd. The Killila Discretionary

Trust is a beneficiary of the Peak Childcare Trust and the Peak Childcare Management Trust.

6.DJMBar Pty Ltd acts as trustee for the DJMBar Trust. Mr Dan Magree is a member of the Peak

Equities Advisory Board and is a Responsible Officer pursuant to the Peak Equities Pty Ltd AFS Licence. DJMBar receives consulting fees from Peak Equities Management Pty Ltd.

ANTI-MONEY LAUNDERING AND COUNTER-TERRORISM FINANCING

The Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (AML/CTF) requires entities such as Peak Equities Pty Ltd to maintain a program that identifies, mitigates and manages money laundering and terrorism-financing risks associated with its business.

In this regard, the Trustee may require investors to provide additional information for identification and verification purposes. Please note that the Trustee may not accept an Application to invest in the Fund until

it is satisfied that the identity of the Investor has been verified in accordance with the requirements of the AML/CTF.

If you do not provide a completed Application Form, this may delay the processing of your Application or result in your Application being declined.

PRIVACY PROVISIONS

Peak Childcare Management Pty Ltd is committed to the protection of your personal information in accordance with the Australian Privacy Principles set out in the Privacy Act 1988.

All personal information held by Peak Equities will be governed by Peak’s most recent Privacy Policy. This Privacy Policy applies to the collection, use and disclosure of personal information. Peak collects your personal information for the purpose of providing its property acquisition and funds management services. The information will not be made available to third parties other than required by our privacy policy and applicable law and to service providers necessary for us to conduct our business activities. If we cannot collect personal information from you, we may not be able to perform the activities listed above.

The personal information collected from you on the Application Form is used to evaluate your Application for Units in this Trust as well as to issue Units, service your needs as a Unitholder and administer the Trust.

This includes information that Peak Equities Pty Ltd must pass on to Peak Childcare Management Pty Ltd, and other service providers. The personal information you provide is kept for record keeping purposes. If you do not provide the necessary personal information, your Application may not be processed. Once personal information is no longer needed for the Fund and Peak’s records, it is destroyed or de-identified. Your personal information may be disclosed overseas.

Unitholders have a right to access the information about them held by Peak and to correct any errors as set out in our Privacy Policy. Please advise us of any information that appears inaccurate or incomplete (especially your address and correct investing entity name). You can call Peak on +61 (03) 9863 8380 or write to Peak at the address listed below to access the information held about you held by Peak. If you have any complaint in relation to the manner in which your information has been handled, please contact us.

As well as reporting to you on your investment, Peak may use your contact details to forward newsletters and to let you know about future investment opportunities offered by Peak. If you prefer not to receive these communications, please telephone or write to Peak.

If obliged to do so by law, Peak will pass on your personal information to other parties such as the Australian Taxation Office and other regulatory bodies, strictly in accordance with legal requirements.

COMPLAINTS AND CONTACTING US

Peak Childcare Management Pty Ltd seeks to resolve potential and actual complaints over the management of the Trust to the satisfaction of Unitholders. If

a Unitholder wishes to discuss any aspect of the management of the Trust or wishes to lodge a formal complaint, they may do so in writing, by email or by telephone at:

Peak Childcare Management Pty Ltd

Suite 1438, 1 Queens Road

Melbourne VIC 3004

Telephone: 03 9863 8380

Email: info@peakequities.com.au

The company will promptly acknowledge any complaint received from a Unitholder, investigate it, and decide in a timely manner any action that needs to be taken.