LEARN MORE ABOUT THE POTENTIAL OF INVESTING WITH PEAK EQUITIES
INFORMATION MEMORANDUM
DUDLEY PARK UNIT TRUST
6 Oxenham St, Dudley Park, SA
19TH AUGUST 2020
BLUE CHIP TENANT
8 YEARS INCOME SECURITY
FORECAST MONTHLY DISTRIBUTIONS 8% p.a.
WHY PEOPLE CHOOSE PEAK EQUITIES
Opportunity |
Monthly Tax- |
Expert Property |
Diversification |
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Management |
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Communication and Information
Chairman’s Message
Dear Investor,
We are pleased to present The Dudley Park Unit Trust (“the Trust”), offering participation in the ownership of a premium office and industrial asset in Dudley Park, an inner Adelaide suburb approximately 3 km from the CBD.
Peak Equities Pty Ltd, acting as trustee for the Trust has agreed to terms to acquire the property at 6 Oxenham St, Dudley park SA in an
The property is securely leased to the principal operating company in the Spotless Group, supported by a bank guarantee equal to 12 months income. While remaining committed for the entire 15 year lease term, rather than occupy, Spotless elected from the outset to
Sound investment decisions today must recognise and be responsive to the exceptional circumstances in which we find ourselves in this
In these circumstances, Peak Equities has framed a defensive investment strategy encompassing 3 essential criteria:
1.A qualifying investment property must have a long remaining lease term (ideally
2.Investment security is equally dependent on the quality of the tenant. The tenant must also be capable of riding out the downturn and must have the financial capacity to honour its obligations under the lease.
3.The property itself must be well located and constructed to a high quality.
The commercial property at 6 Oxenham St, Dudley Park, satisfies each of these requirements. The head lease to Spotless provides us with
We consider the property to have been
With modest gearing, the initial net income of the Trust is forecast to commence from approximately 10% per annum. That will enable us to make monthly income distributions at the rate of 8% per annum and to simultaneously accumulate cash reserves to provide for future contingencies.
We are proposing to borrow 45% of the contract price by way of first mortgage facility. Based on our modelling we will be raising $9.8 million in equity capital.
We commend this investment for your consideration.
Tom Borsky
Chairman
Contents
INTRODUCTION |
2 |
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OFFER DETAILS |
4 |
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PROPERTY DETAILS |
6 |
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TENANCY DETAILS |
7 |
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FINANCIAL SUMMARY & INCOME |
8 |
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FORECASTS |
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MANAGER’S ENTITLEMENTS |
9 |
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PEAK PROFESSIONALS |
9 |
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RISK FACTORS |
10 |
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ADDITIONAL INFORMATION |
11 |
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APPLICATION FORM |
14 |
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SOPHISTICATED INVESTOR |
15 |
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CERTIFICATION |
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Offer Details
1. The Trust - Peak Equities Pty Ltd is Trustee of the DUDLEY PARK UNIT TRUST, established by Deed dated 2nd July, 2020. The principal activity of the Trust will be the acquisition of the investment property at 6 Oxenham St, Dudley Park SA, 5008.
2. Due Diligence - The Trustee is undertaking a detailed Due Diligence investigation and analysis of the property. Physical inspection was conducted by PEP Solutions, specialist quantity surveyors, who provided a full technical report in relation to the physical structure and quality of the building, together with depreciation calculations and a forecast of likely capital expenditure over a
3. Deposit and Settlement - Upon signing the purchase contract, the Trustee will pay a $500,000 holding deposit with settlement scheduled for 1st October 2020, providing adequate time to finalise bank funding and equity capital raising.
4. Purchase Price - The purchase price has been agreed at $16,000,000
5. Term of the Syndicate - It is expected that the property will be held for a period of between 6 and 8 years. The Trustee has discretion to sell the property at any time before that date, if it considers that to do so is in the best interest of Unitholders. Subject to the market conditions then prevailing, the Trustee may recommend to Unitholders to retain ownership beyond the forecast holding period.
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6. Liquidity - The Trustee undertakes that Investors in the Trust will be entitled to exit their investment at Net Asset Value per Unit at any time after the 6th anniversary of the establishment of the Trust. Investors wishing to exit earlier than that date will be assisted by the Manager, however liquidity cannot be guaranteed within the
7. Forecast Distribution Rate - The Trustee proposes to make monthly cash income distributions to investors commencing at the rate of 8.0% per annum.
8. Funding - Peak Equities is seeking first mortgage funding at an LVR of 45% of the contract price. Favourable terms are anticipated in the current market environment, including a
9. Applications for Units - Each Investor is invited to apply for between 100 and 800 Ordinary Units of $1,000 each in the capital of the Trust (Investment Value $100,000 to
$800,000). Applications may only be made on the Application Form attached to this Information Memorandum.
Offer Details (continued)
10.Offer Period - The offer will remain open until full subscription has been received. The Trustee has complete discretion as to the number of Units (if any) to be allocated to each Applicant.
11.20% Deposit Payable - Once the Trustee has confirmed the allocation of Units to an applicant, the investor must lodge a deposit equal to 20% of the allotted value of the units, directly into the solicitor’s trust account. (see Application Form for details).
12.Balance Payment - The remaining 80% of the subscription price will be payable no later than
Thursday, September 24th, 2020. Unit Certificates will be issued by the Trustee following settlement of the purchase.
13.Offer Limited to Wholesale Investors - The Offer is available exclusively to Wholesale or Sophisticated Investors as defined in the
Corporations Act.
14.Trust Documents - Prior to confirming their investment, intending Unitholders may request a copy of the Trust Deed of the Dudley Park Unit
Trust and the Management Deed, on a strictly confidential basis.
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Property Details
6 Oxenham Street
Built to an extremely high standard for Spotless Group in 2013 with an accompanying
This asset is strategically located in one of Adelaide’s most desirable industrial and
The property enjoys easily accessible links to major arterial roads such as Grand Junction Road, Churchill Road, South Road, Gallipoli Drive and Main North Road (Princes Highway). It also sits between the two railway stations that border the suburb, Islington railway station and Dudley Park railway station.
Constructed: |
2013 |
Site Area: |
9,000 sqm |
Net Lettable Area: |
4,420 sqm |
Office: |
3,220 sqm |
Warehouse: |
1,200 sqm |
Passing net income: |
$1.254m |
Annual rent increases: |
3.5% |
Lease term: |
15 years (exp 02/28) |
Head Lessee:
Spotless Facility Services Pty Ltd -
Subsidiary of Downer EDI Ltd
Sub Lessee:
Commonwealth Government, Department of Defence
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Tenant Details
Spotless Group Ltd has been a dominant operator in the integrated facilities services sector. The Group was acquired by Downer EDI in 2017 and is now the dominant company in that field throughout Australia and New Zealand. The Group provides essential services and solutions for everyday operations and services across sectors and industries.
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Head Lease |
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Tenant |
Spotless Facility Services |
Department of Defence |
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Term |
15 years |
3 years |
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Commencing |
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Expiring |
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Options |
5 + 5 |
2 |
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NLA |
4,420 |
4,420 |
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Passing rent |
$1.254 (net) |
$1.475m (gross) |
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Annual Increases |
3.50% |
3.50% |
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Security |
Spotless Group Ltd Guarantee - 12 |
N/A |
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months rent |
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The Department of Defence is a
The Defence Department must give formal notice of their intention to exercise the second option by 31 December 2020. We have been advised by the Vendor that the Department has indicated they will exercise the second option, extending their occupancy to at least 30 June 2023. Whatever the intentions of the Government tenant, our income security derives from the head lease with the Spotless Group, with a further term of almost 8 years.
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Financial Summary
Contract Price |
16,000,000 |
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Acquisition Costs |
128,000 |
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Establishment Fees |
500,000 |
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Due Dilligence and Borrowing Expenses |
118,000 |
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Cash Reserve |
254,000 |
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Total Funds Required |
17,000,000 |
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Mortgage - 45% of Contract Price |
7,200,000 |
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Investor Equity Required |
9,800,000 |
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Income Forecasts
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Year 1 |
Year 2 |
Year 3 |
Year 4 |
Year 5 |
Year 6 |
Year 7 |
Year 8 |
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$’000 |
$’000 |
$’000 |
$’000 |
$’000 |
$’000 |
$’000 |
$’000 |
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Gross Rent |
1,254 |
1,298 |
1,343 |
1,390 |
1,439 |
1,489 |
1,541 |
1,595 |
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Mortgage Interest - 2.3% |
166 |
166 |
166 |
166 |
166 |
166 |
166 |
166 |
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Management & |
117 |
117 |
117 |
117 |
117 |
117 |
117 |
117 |
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Professional Fees |
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Net Income |
971 |
1,015 |
1,061 |
1,108 |
1,156 |
1,207 |
1,259 |
1,313 |
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Yield on Equity (inc. Founder Units)
9.9%
10.4%
10.8%
11.3%
11.8%
12.3%
12.8%
13.4%
Capital Expenditure |
100 |
100 |
100 |
100 |
100 |
100 |
100 |
100 |
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Allowance |
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Income Distribution 8% |
809 |
809 |
809 |
809 |
809 |
809 |
809 |
809 |
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Operating Surplus |
63 |
107 |
152 |
199 |
248 |
298 |
350 |
404 |
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Cumulative Cash Reserve
317
423
575
774
1,022
1,320
1,671
2,075
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Manager’s Entitlements
Category
Establishment Fee
Description |
Entitlements |
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The Manager charges an initial fee calculated |
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as a percentage of the Acquisition Cost of the |
3.10% of Acquisition |
investment property, including stamp duties and |
Cost of the Property |
other statutory transaction costs. |
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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 3.0% of the income and capital of the Trust.
Syndicate Management Fees
Paid monthly to Peak Equities 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.
0.60% 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
Peak Professionals
Our team of property and financial professionals provide extensive industry experience and proven results.
TOM BORSKY |
DAVID BORSKY |
JAMES WEAVER |
DAN MAGREE |
CHAIRMAN |
EXECUTIVE DIRECTOR |
EXECUTIVE DIRECTOR |
PROPERTIES CONSULTANT |
B.EC FCA |
COO B.COM |
B.COM LLB |
FAPI FRICS CPV |
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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
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 in the sections 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 and the Unitholders Deed.
Property Risks
Property investment by its nature involves risk, and investment in the Trust is no different. The Manager cannot guarantee the occupancy rate of the property, nor the income available for distribution to investors. Neither can the Manager warrant that the eventual sale of the property will generate capital gains to the investors.
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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
It is intended to partially fund the purchase of the property 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. (Peak)
1. Purchase Contract
Peak Equities Pty Ltd will execute a Purchase Contract upon the completion of satisfactory Due Diligence
investigations, during August 2020.
2. The Trust Deed
The DUDLEY PARK UNIT TRUST was created on 2nd July 2020 with Peak Equities Pty Ltd as trustee and Founder and Special CG Unitholders being 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 3.5% 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.
3. The Management Deed
The Trustee has appointed Peak Equities Management Pty Ltd (PEM) to manage the affairs of the Trust, including the negotiation of purchase terms the trust property; the conduct of all due diligence activities;
Copies of the Trust Deed and Management Deed may be provided to Unitholders, subject to execution of a
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
1.Peak Equities Management Pty Ltd
(Manager of the Trust, acting as trustee for the Peak Unit Trust). Peak Equities Management Pty Ltd is associated with Tom Borsky and David Borsky, directors of Peak Equities Pty Ltd.
2.Arrabri Nominees Pty Ltd as trustee for the Borsky Family Trust, is the initial holder of Founder Units in the Trust. Arrabri Nominees Pty Ltd is associated with Tom Borsky, a director of Peak Equities Pty Ltd and Peak Equities Management Pty Ltd. The Borsky Family Trust is a beneficiary of the Peak Unit 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 Trust.
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4.TTS (Retail) Pty Ltd as trustee for the D Borsky Family Trust, is the initial holder of Founder Units and Special CG Units in the Trust. TTS (Retail) Pty Ltd is associated with David Borsky, a director of Peak
Equities Pty Ltd and Peak Equities Management Pty Ltd. The D Borsky Family Trust is a beneficiary of the
Peak Unit Trust.
5.Killila Property Group Pty Ltd as trustee of the Killila Discretionary Trust, is the initial holder of Founder Units and Special CG Units in the Trust.
Killila Property Group is associated with Mr James
Weaver, a director of Peak Equities Pty Ltd.
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.
The
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 Equities 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 Equities 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
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.
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As well as reporting to you on your investment, Peak or PEM 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 Equities 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 Equities 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.
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Application for Units
Dudley Park Unit Trust
I/We
(full name of unit holding entity)
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(insert mailing address) |
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Hereby apply to invest the amount of $ ______________in______________ Ordinary Units of $1,000 each,
in the capital of the DUDLEY PARK UNIT TRUST, constituted by Deed dated 2nd July, 2020.
20% Deposit Payable
Investors must lodge a deposit equal to 20% of value of their total investment within 7 days of confirmation of the number of allocated units. Deposits funds are to be paid directly into the solicitor’s trust account. (details below)
Account: Account No: BSB: Reference:
Investor Bank account details for income distributions
Account Name: ___________________
Account number:__________________
BSB: _____________________________
I/we agree that, upon the units being allotted, I/we shall be bound by the terms and conditions of the Trust Deed.
Signed by/on behalf of the Applicant by |
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Signature |
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Once completed, this form can be submitted it via email or post.
Address: Peak Equities - Suite 1438, 1 Queens Road, Melbourne, VIC, 3004
Email: info@peakequities.com.au
Phone: 03 9863 8380
ABN 21 165 827 574. Holder of AFS Licence 458013
Sophisticated
Investor Certification
to be submitted with application by all new investors
Name and Address of Investing Entity
I certify that the following is true and correct in every particular:
a.I am a qualified accountant within the meaning of section 9 of the Corporation Law1.
b.This certificate is given at the request of the investor named above (“Investor”) in relation to potential offers by Peak Equities Pty Ltd to subscribe for or acquire securities.
c.This certificate is given to Peak Equities PTY LTD for the purpose of section 708(8)(c) of the Corporations Law; and
d.The Investor has:
(i)Net assets of at least $2,500,000; or
(ii)A gross income for each of the last 2 financial years of at least $250,000 a year.
Name of Qualified Accountant
Name and member number of professional body |
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Signature |
Date |
1”Qualified accountant” means a member of a professional body that is approved by ASIC in writing for the purpose of the definition. ASIC has indicated that it will approve any member of:
a.The Australian Society of Certified Practicing Accountants (“ASPCA”), who is entitled to use the
b.The Institute of Chartered Accountants in Australia (“the ICAA”), who is entitled to use the
c.The National Institute of Accountants (“the NIA”), who is entitled to use the
Once completed, this form can be submitted it via email or post.
Address: Peak Equities - Suite 1438, 1 Queens Road, Melbourne, VIC, 3004
Email: info@peakequities.com.au
Phone: 03 9863 8380
15 ABN 21 165 827 574. Holder of AFS Licence 458013
Peak Equities Pty Ltd
info@peakequities.com.au | www. peakequities.com.au
16ABN 21 165 827 574. Holder of AFS Licence 458013
GRAND JUNCTION UNIT TRUST
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