June 2018 INVESTOR NEWSLETTER - Home | Village ......THE BRICKWORKS AT BULLI With only 2 dwellings...

INVESTORNEWSLETTER

June 2018

COMPANYNEWSTO OUR VALUED SHAREHOLDERS AND INVESTORS

It has been another busy period for the team at Village. As we approach the midway point of the year we remain focused on delivering a solid financial result for the 2018 financial year, running our projects and business well and ensuring we maintain a healthy pipeline of work.

Our 30 year anniversary coincides with the

retirement of Bob Winnel (AM). Bob founded the

Company in 1988 and has led it through many

achievements and milestones over the last 30 years.

Bob stepped down from day to day operations

of the business two years ago and has had an

advisory role since that time. This advisory role will

substantially reduce in July but he will continue in

his capacity as an integral member of the Board,

Chairman of the Acquisitions Committee and

Director of the Big Banana Fun Park. I’d like to

congratulate and thank Bob wholeheartedly for

everything he has achieved, for his support and his

tenacity and passion for Village. We look forward to

celebrating these achievements on Friday 27 July at

the National Arboretum in Canberra.

The highly publicised Banking Royal Commission

has some market analysts pointing to further

tightening and restrictions on bank lending. Village

is well positioned in this regard with the success of

our secured notes and preference shares providing

improved cash reserves at an efficient cost of

capital, while our solid relationships with multiple

banks ensures we are supported and well diversified

in our lending.

The last 3 months has seen a solid flow of funds

back to our shareholders and investors with the final

return of profit on the highly successful Brickworks

at Bulli project, a return of equity at Meadows at

Austral (Austral 1) and Westside at Indooroopilly,

and payment of our 3 cent interim dividend to

shareholders in June.

South Jerrabomberra is another step closer to

commencing with the amended Development

Control Plan and all state and local infrastructure

now approved. We anticipate Joint Regional

Planning Panel approval of the stage 1 Development

Application by the end of the June quarter which

covers the majority of dwellings in the development.

South Tralee has seen fundamental changes since

the initial project in 2002 and we are now advancing

the opportunity for a greater combined project

including the land at South Tralee and the Forrest

and Morrison land. A proposal will be developed

over the September quarter to recapitalise a

new combined South Jerrabomberra project in

consultation with the existing syndicate investors.

Our highly anticipated Weston project in the ACT,

named The Quarters, has been well supported by

our syndicate investors and is now fully subscribed.

We are due to settle on the site this month and have

commenced public consultation, with a sales launch

planned for the September quarter.

In Queensland, WoodLinks at Collingwood Park

continues to perform well achieving 50% sales

growth year on year which is a very satisfying

outcome. Westside at Indooroopilly has completed

construction ahead of schedule bringing

settlements forward 3 months.

I remind our investors of the special discounted

price and rental guarantee offer for the remaining

units at this quality development.

Cover Image: The Big Banana, Coffs Harbour

VILLAGE BUILDING COINVESTOR NEWSLETTERJune 201802

In Melbourne, we have now settled on the purchase

of our site at South Morang, named Trilogy. Our

revenue and cost assumptions are holding in line

with budget and we are confident the project is

shaping up as an important contributor to our

future profit.

While our overall project portfolio is in good health

we are not without our challenges.

Yarraman Village at Noble Park in Victoria

continues to experience challenges with delays in

the construction of the first 32 townhouses and

the build cost for the remaining 126 townhouses

exceeding budget. The buoyant Melbourne market

has flowed through to increased build costs

where we are seeing significant cost and resource

availability pressures. This is putting downward

pressure on the project surplus and IRR but

we continue to develop and implement strategies

to minimise the downward impact.

We continue to work through the ongoing

challenges at Austral with the timing of both

Council and utility provider approvals, including our

Development Applications, civil works construction

certificates and storm water management.

While focused on running our projects well, we

are also committed to maintaining a strong future

pipeline. In May we entered into an exclusive 90-

day due diligence to acquire a 55 hectare site

in Cordeaux Heights, eight kilometres west of

Wollongong. This site has expansive ocean views

and will yield in excess of 90 residential blocks of

land ranging in size from 1,000m2 to more than

10,000m2. We look forward to presenting this

opportunity to our shareholders and investors

in the September quarter, subject to our due

diligence validating our feasibility assumptions

and risk assessment.

In May we received significant press coverage

at the Big Banana following the Federal Budget

announcement of funding for the much anticipated

Coffs Harbour bypass. With the Big Banana

contributing close to $1m to our annual profit and

having celebrated our first full year of owning 100%

of the Big Banana, we see this as an opportune

time for the next stage of growth. The July Board

meeting will be held in Coffs Harbour where we will

review our strategic plan of the Big Banana which

will underpin a revised masterplan for the next 5, 10

and 20 years.

I look forward to seeing many of you at our

quarterly shareholder and investor information

session at 6pm on Wednesday 13 June at the East

Hotel in Canberra and thank you for your continued

support and commitment.

Best regards,

Travis Doherty Chief Executive Officer


VILLAGEBUILDING.COM.AU

03

THE BRICKWORKS AT BULLI

With only 2 dwellings yet to be completed and 1 block of land to be sold in our very successful Bulli project, we have accelerated and paid the final profit distribution to syndicate investors in April 2018. We intend to close the syndicate at the end of this financial year to avoid ongoing administration costs.

NSW

THE SUMMIT AT COFFS HARBOUR

The remainder of this site is anticipated to be delivered to the market as land lots as we aim to accelerate and complete this development. 16 land lots and 2 multi-unit sites were released to the market in October 2017 and to date, we have sold 12 land lots.

The civil construction on the Pinnacle Way road which services 11 of these 18 land lots has commenced and is expected to be complete by June.

NSW

THE MEADOWS AT AUSTRAL 1

89 of the 92 land lots at our “Meadows” project at Austral have been sold with 66 settled to date.

Civil works are nearing completion and we continue to work through ongoing challenges relating to the timing of approvals by Liverpool Council due to restrictions imposed by Jemena on the high-pressure gas easement. This will defer settlements for 8 lands lots that will now settle in the 2019 financial year.

NSW

NSW

THE VILLAGE AT CORRIMAL

We have sold 20 of the 60 apartments which are being released progressively to the market. We have previously experienced strong buyer interest from both local and Sydney buyers, however the last 6 weeks has seen this market interest soften.

Demolition on the site has been completed. We are working with our builder to finalise details to commence construction in early June in line with the removal of the old power substation and completion of earthworks.

The 6 townhouses were released to the market in May with one sold to date. We are finalising the construction tender process with the build cost anticipated to be within budget parameters.

PROJECT UPDATES


LIVERPOOL CBD

WesternSydney

Parklands

NORTH

M7 MOTORWAY

SYDNEY CBD

WESTERN SYDNEY AIRPORT

BRAESIDE & FAIRFIELD HOSPITALS

EIGHTEENTH AVE

SEVENTEENTH AVE

CRAIK AVE

LEPPINGTON RAILWAY STATION

FUTURE RELEASE

AUSTRAL 3

AUSTRAL 3

We await the issue of the Development Consent from the Liverpool Council for our 28 lot Austral 3 project.

NSW

WOODLINKS VILLAGE AT COLLINGWOOD PARK

154 of the 167 lots released to the market have been sold in our WoodLinks Village project at Collingwood Park which has a total yield of 778 lots.

Of the 154 lots sold to date, 116 lots have been settled, with a further 19 expected prior to the end of the financial year.

The market remains steady for house and land in south east Queensland, although tightened lending criteria from banks has reduced the ability for first home buyers to access finance on low deposits and loan applications are becoming much slower to process.

QLD

PARKLANDS AT AUSTRAL 2

Civil work has commenced on the first 80 lots in our 209 lot “Parklands” development in Austral.

66 lots have been sold across the 94 lots that have been released to the market with a consistent level of buyer enquiry. A refreshed marketing campaign has accompanied the commencement of civil works, in addition to new site signage. Settlements are expected to commence in August 2018.

NSW

SOUTH JERRABOMBERRA

A number of significant planning milestones were achieved during the period. The State Planning Agreement detailing the state infrastructure arrangements has been agreed with the Department of Planning and Environment which now resolves the state infrastructure for the South Jerrabomberra release area.

The local infrastructure arrangements have now been agreed with Council with the South Jerrabomberra Section 94 Plan approved as well as a Local Planning Agreement for the provision of sewer and water for the release area. A revised Development Control Plan was adopted by Council in February 2018 which has now paved the way for Council approval on the first stage subdivision. The Development Application for stage 1 subdivision works covering the first 318 detached lots and 9 superlots has been lodged with the Council and we anticipate approval in mid 2018.

NSW



05

PROJECT UPDATES

THE RESIDENCES

Alternative design options are being considered and assessed for our 8 dual occupancy Mr Fluffy sites spread across Hackett, Watson, Garran, Chifley and Farrer.

Sales and marketing for the individual dwellings will commence progressively from June 2018. Strong interest has been received from the preliminary marketing on these sites with 91 registrations on the database. Construction on the first site in Garran is scheduled to commence in June 2018.

ACT

HORIZON AT COOMBS

Construction is now complete on this 83 dwelling project consisting of a mixture of townhouses and apartments. The final settlements were completed in December 2017. This project was a Finalist in the Best Affordable Housing Development Award at the 2018 Property Council’s Innovation and Excellence Awards in May.

ACT

WESTSIDE AT INDOOROOPILLY

Construction was completed ahead of schedule on our 119 apartment Westside complex, including the rooftop pool and recreation area.

96 of the 119 apartments are sold, with 91 of these settled to date. 5 exchanged contracts were rescinded due to buyers not settling.

The apartment market in Brisbane remains challenging. There remains steady interest from buyers but a reduced selection of product type is a further hurdle to convert potential buyers. We are continuing to execute a range of marketing initiatives, including strategies aimed at investors and first home buyers. We have also provided an exclusive offer to all VBC investors that includes discounts and a rental guarantee. Further information on this offer is included in the Investment Opportunities section of this newsletter.

QLD

CARRAMAR AT MONCRIEFF

Certificate of Occupancy has been received on our 42 townhouse development at Carramar here in the ACT with settlements expected to be complete by the end of June 2018. All townhouses in this project have been sold.

ACT


YARRAMAN VILLAGE AT NOBLE PARK

Construction of the first 32 of the 158 townhouses, while behind schedule, are well advanced. We are closely managing the construction program with JG King to ensure practical completion is achieved in the September quarter as contracted with the builder.

Civil works for the remaining 126 dwellings in stages 2 to 6 are well advanced and are expected to be completed in the September quarter. Level 10 Pty Ltd has been nominated as

our preferred builder for the 62 townhouses in stages 2 to 4 and a construction contract is expected to be completed by the end of the June quarter.

All 107 townhouses released to the market have been sold. The remaining 51 townhouses will be released in the second half of the year. The Melbourne residential property market remains very strong, particularly across townhouses and detached housing.

VIC

VIC

TRILOGY AT SOUTH MORANG

Settlement has been completed on the acquisition of our 239 townhouse development site in South Morang. The delay in settlement of almost 6 months, which was attributable to subdivision approval by the vendor taking longer than anticipated, has benefited the project by enabling us to progress the development without the full impact of the budgeted holding costs.

Our detailed design has progressed, and we expect a permit for the development by the end of the June quarter. Civil documentation is complete and issued for tender.

We are finalising the build program and costs for the townhouses, with sales and marketing anticipated to commence in the September quarter with the opening of a new sales suite.

May 2018 coordinate.com.au Copyright © Coordinate 2018

ACT

THE QUARTERS AT WESTON

We continue to work through the planning and approval phases on this project and have undertaken a full review of the design, masterplan and product mix for this site. We have commenced the public consultation phase prior to EDP/DA lodgement. This former AFP Training College site in Weston is expected to yield between 245-260 dwellings with a proposed mix of land lots, townhouses and apartments. The site is located in a sought after suburb close to schools, three main shopping hubs, employment, restaurants and parklands.

A sales launch is expected to be held in the September quarter with construction forecast to commence in the June 2019 quarter. Settlement on the acquisition of the site will occur in June 2018.



07

INVESTMENTOPPORTUNITIES

SHAREHOLDERINFORMATIONDIVIDEND

The Board has declared a fully franked 3.0 cent interim dividend for the 2018 financial year that will be paid on 15 June 2018.

A copy of the Company’s Dividend Reinvestment Plan is available at www.villagebuilding.com.au/invest or at Computershare.

The Board has purposely held the DRP price at 85 cents, which represents a 36% discount on the net asset backing per share at 30 June 2017, to encourage participation in the DRP.

The Company benefits by shareholders participating in the DRP as it assists in further strengthening the Company’s ability to take advantage of new development opportunities through an expansion of its capital base. Participation in the DRP is optional and offered to all shareholders thereby providing equal opportunity to maintain proportional interest in the Company.

The half yearly dividend for CRPS-1 shares and the quarterly dividend for CRPS-2 shares will be paid in late June 2018.

WESTON

The new syndicated project at Weston is fully subscribed and is now closed to further investment.

WESTSIDE AT INDOOROOPILLY

An exclusive opportunity is available to shareholders and investors to purchase an apartment at Westside at a significant discount.

Our very successful Westside development in Indooroopilly, Queensland is now complete with 96 sold of which 91 have settled out of a total of 119 apartments.

Westside is located in the highly sought after suburb of Indooroopilly, 6km from the Brisbane CBD in an elevated position, capturing picturesque city views. Westside’s convenience offers a major shopping centre, a train station and other amenities on its doorstep. The development contains a mix of beautifully appointed spacious 1, 2 and 3 bedroom apartments.

We are offering an exclusive opportunity to our valued shareholders and investors to purchase one of the remaining apartments at Westside, Indooroopilly at a substantial discount together with a rental guarantee for the first 12 months.

The Offer

• A price discount per the below:

− 1 bed = $20,000 discount;

− 2 bed = $25,000 discount;

− 3 bed = $30,000 discount; and

• 5% guaranteed rental return for the first year (12 months)

The Terms

• Contract must exchange and settle on or before 30 June 2018; and

• The onsite manager will be appointed as the letting agent.

If you wish to take advantage of this exclusive offer, please contact Melissa Anderson, our General Manager, Sales and Marketing on 0458 200 525 or [email protected].


SECURED NOTESSecured notes are available for investment and form an important part of the Company’s funding structure. These notes assist in reducing the weighted average cost of capital of the Company which currently sits at 9.47%.

Further investment in the Series F notes and the 1 year Series D notes has now closed. However, notes in the other Series with terms of 2 to 5 years are still available and offer attractive investment rates.

Secured notes are only available to sophisticated and professional investors. The notes application document is available on request.

SHARESOrdinary shares can be purchased from the Company at the Dividend Reinvestment Plan price of 85 cents per share. Share purchases are subject to Board approval.

Forecast Investor Returns / (Equity Contributions) as at 01/05/2018

Project Type Date % of Total

Westside at Indooroopilly Equity Distribution 2 30/06/2018 23.00%

Equity Distribution 3 31/07/2018 16.00%

Equity Distribution 4 31/08/2018 17.00%

Profit Distribution 1 31/08/2018 9.92%




Meadows at Austral 1 Profit Distribution 1 31/07/2018 84.93%

Parklands at Austral 2 Equity Distribution 1 31/10/2018 3.33%

Trilogy at South Morang Equity Call 3 30/06/2018 (7.65%)

Equity Call 4 30/09/2018 (9.41%)

The Village at Corrimal Equity Call 3 30/09/2018 (20.38%)

Austral 3 Equity Call 2 31/12/2018 (15.84%)

The Quarters at Weston Equity Call 1 01/06/2018 (63.33%)

Equity Call 2 26/10/2018 (4.84%)

WoodLinks at Collingwood Park Loan / Equity / Profits Future

Yarraman Village at Noble Park Equity / Profits Future

Note: The above information is indicative only being based on best estimates at the date of issue and is subject to change.

For enquiries regarding secured notes, shares or any other investment matter please contact Vince Whiteside on 0404 891 150 or [email protected].



09

WORK HEALTH & SAFETYINFORMATION

PLAYING SAFE AT THE BIG BANANA

The ongoing commitment to safety continues with the routine audits scheduled every six weeks. Regular staff training and orientation of new casual staff members also contributes to the “safety first” environment.

During this quarter both an internal and an external (third party) audit was conducted at the Big Banana assessing our compliance with our safety systems and legislative requirements. Results from both audits were exceptional, with the Big Banana continuing to provide great safety results. Internal staff training remains a high priority as does the ongoing routine maintenance allowing us to have less incidents, and reduced downtime.

SAFETY FIRST

Village Building adopts a “safety first” culture contributing to a safer work environment for staff and contractors alike. We remain incident and injury free across all Village Housing sites. Regular internal safety audits and inspections continue to occur and are proving effective in identifying and mitigating risk prior to incidents occurring.

Michael Lockman – General Manager of The Big Banana

Construction continues at Yarraman Village at Noble Park, VIC


STAFF PROFILEMELISSA ANDERSONWe are very excited to welcome Melissa Anderson back to Village in the role of General Manager, Sales and Marketing where her role includes the accountability and oversight of the sales and project marketing functions across the business. Melissa previously worked with Village from 2012 to 2014 as our National Marketing Manager.

Melissa has a broad, in depth understanding and commitment to property having 13 years’ experience in the industry, working for major multi nationals such as Delfin, Lend Lease and Mirvac. More recently Melissa has spent the last three years working for the Suburban Land Agency (previously, the Land Development Agency), within the ACT Government as the Senior Sales and Marketing Manager responsible for all sales and marketing of land releases in accordance with the Indicative Land Release Program. Her experience and expertise includes the sales and marketing of greenfield masterplanned communities, medium to high density built form and mixed use developments including urban regeneration and infill projects, as well as commercial, community and industrial land. Melissa has a Bachelor of Business, specialising in Marketing and has a passion for strategic visioning in building communities with the objective to help people achieve the great Australian dream.

Development site for Parklands and The Meadows by Village located in Austral, NSW

Melissa Anderson - General Manager, Sales and Marketing



11

The Village Building Co LimitedP. (02) 6241 6844

W. www.villagebuilding.com.au

June 2018 INVESTOR NEWSLETTER - Home | Village ......THE BRICKWORKS AT BULLI With only 2 dwellings...

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