AIMS PROPERTY SECURITIES FUND — Board/Management Information 2012

Apr 19, 2012

ASX Code: MPS SGX Code: MacCookPSF

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20 April 2012

MacarthurCook Property Securities Fund (MPS or the Fund) Response to BlackWall Property Funds Ltd (BlackWall) Announcement

1. Background

On 4 April 2012, BlackWall made an ASX release (BlackWall Announcement) announcing a proposal that a member of the BlackWall group intends to stand as replacement responsible entity for MPS. BlackWall attached a proposed notice of meeting to its ASX release and stated that it intends to dispatch the notice to unit holders in MPS.

MacarthurCook Fund Management Ltd (MacarthurCook) is the Responsible Entity for MPS.

While MPS will provide a comprehensive written response and send to all unit holders, the following is the summary response of MPS.

MacarthurCook in its capacity as both Responsible Entity and in its personal capacity does not support a change in responsible entity for the following reasons:

2. Litigation between MPS and BlackWall

In the notice of meeting, BlackWall acknowledges that MacarthurCook as Responsible Entity of MPS is currently suing a BlackWall managed ASX listed trust (P-REIT).

MacarthurCook seeks damages in excess of $13 million on behalf of MPS unitholders. MacarthurCook claims that the Responsible Entity of P-REIT failed, in breach of its contractual obligations, to redeem 15 million units P-REIT held by MacarthurCook as Responsible Entity for MPS at an agreed price of $1.00 per unit during November and December 2008 . In addition MacarthurCook seeks damages now in excess of $6 million from the BlackWall entity which manages P-REIT in its personal capacity.

Head Office Sydney: Level 16, Central Square 323 Castlereagh Street, Sydney NSW 2000 Australia PO Box K222 Haymarket NSW 1240 Australia Client Services: 1300 655 197, 1300 362 117 Fax: +612 9281 7611 Melbourne Office: Level 9, 350 Collins Street, Melbourne Victoria 3000 Australia PO Box 28 Flinders Lane VIC 8009 Australia Email: mail@macarthurcook.com.au Website: www.macarthurcook.com.au

MacarthurCook Group MacarthurCook Fund Management Limited ABN 79 004 956 558 AFS Licence No: 258052 MacarthurCook Investment Managers Limited ABN 45 099 054 074 Licence No: 225357 SEC No: 801-66388 MacarthurCook Real Estate Funds Limited ABN 32 126 766 167 AFSL No: 318261

Sydney Melbourne Beijing Shanghai Tianjin Guangzhou Hong Kong Singapore

MacarthurCook is confident of succeeding in the litigation. If it is successful, MPS will be entitled to receive in excess of $13 million plus interest from P-REIT and in addition in excess of $6 million personally from the BlackWall entity which is currently the Responsible Entity of P-REIT.

In addition to its proposal to replace MacarthurCook as Responsible Entity of MPS, BlackWall has convened a meeting of Unitholders of P-REIT for 9 May 2012 to vote on resolutions to replace the current Responsible Entity of P-REIT with TFML Limited. If unitholders of MPS vote to replace MacarthurCook with TFML as Responsible Entity of MPS then TFML may be responsible for pursuing damages from P-REIT on behalf of MPS unitholders at the same time it is responsible for managing P-REIT on behalf of P-REIT's unitholders. TFML will be in a position of irreconcilable conflict.

MPS unitholders could not be confident that, in these circumstances, TFML would be free to pursue the claim for damages from P-REIT to the maximum benefit for MPS unitholders. The court hearing is scheduled to commence on 9 July – which is less than 2 weeks after the time selected by BlackWall for the MPS meeting (being 29 June 2012).

BlackWall has requested that MacarthurCook disclose the amount of legal fees incurred to date and the estimate of legal fees to run the upcoming court hearing. MacarthurCook has declined to disclose this confidential information. Providing such information to the opposing party in legal proceedings may leave MacarthurCook as the Responsible Entity of MPS at a strategic and commercial disadvantage in the litigation.

3. Impact on NTA of MPS’ investment in P-REIT

In our opinion, there is a clear link between the decline in value in the P-REIT units and the litigation to recover the MPS investment in P-REIT. Based on the last trading price of P-REIT units on 19 April 2012, being $0.10 per unit, MPS’ investment in P-REIT has a market value of $2.258m which represents an unrealised loss of $12.742m or 6.6 cents per unit currently on issue.

4. Inability to Liquidate MPS

BlackWall claims that if it becomes the Responsible Entity of MPS it will undertake an asset sale programme and return the net proceeds to unit holders. In our opinion, this strategy is fundamentally flawed and cannot be implemented within any short to medium time frame without incurring significant losses. The claim by BlackWall that it will pay investors 14 to 20 cents has been made without disclosing sufficient information so as to enable unitholders to determine whether the forecast is relevant and reliable. Specifically, the forecast does not disclose:

• the material assumptions: Section 4.1 of the BlackWall Announcement only states that there are a number of "best estimate assumptions" but does not disclose what these

are. The assumptions should be detailed and specific enough to enable unitholders to work through the forecast return of 14c – 20c per unit;

• sensitivity of the forecast: there is no analysis of how possible changes in the "best estimate assumptions" may affect the ultimate return to unitholders;

• the time frame: the BlackWall Announcement does not set out the time when unitholders can expect to receive the forecast return of 14c – 20c per unit.

Of MPS’ asset portfolio as at 29 February 2012, $59.7m (96%) of $62.2m is held in securities of 18 separate unlisted property funds. There is no market for any of these securities and no activated liquidity facilities are provided by the existing fund managers.

MPS has actively sought to realise investments in all the above funds as it has sought to increase additional surplus cash to reduce the existing OCBC debt facility. Over the period from March 2010 to March 2012, assets have been sold (or redemption proceeds received from the funds) totalling $15.7 million.

5. Voting Intentions of MacarthurCook

AIMS Group Holding Pty Limited and its associates (AIMS) hold 12.09% of the units which MPS has on issue. AIMS intends to vote all these units against the resolutions proposed by BlackWall.

6. Strategy for MPS

Contrary to assertion that MPS does not have a strategy in place, since AIMS took over MacarthurCook Limited in August 2009, our stated objective has been to stabilise MPS’ balance sheet through substantially reducing the OCBC debt facility. Under AIMS ultimate management, the OCBC debt facility and balance sheet gearing has been reduced as follows:

• In June 2009, the Fund’s debt was $44.5 million representing gearing of 38%

• In June 2010, the Fund’s debt was $36.65 million representing gearing of 36%

• In June 2011, the Fund’s debt was $25.95 million representing gearing of 31.5%

• In September 2011, the Fund’s debt was $24.65 million representing gearing of 30.1%

• On 31 December 2011, the Fund’s debt was $16.8 million representing gearing of 25.6%

The intention is to continue the debt reduction with the objective that MPS can recommence distributions to unit holders next year. This should lead to an increase in the MPS unit price and trading volume and allow unit holders (should they elect) to exit through a sale on the ASX.

MacarthurCook’s medium to longer term strategy for MPS is to provide its investors with regular income with potential for capital growth with an over-riding objective to protect investors’ interest in the Fund.

7. Recommendation

We recommend that unitholders take no action until the Responsible Entity responds fully to the Pelorus Proposal.

Yours faithfully

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Richard Nott Director MacarthurCook Fund Management Limited

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Moni An Company Secretary MacarthurCook Fund Management Limited

About MacarthurCook:

MacarthurCook Fund Management Limited (MacarthurCook) is a wholly owned subsidiary of the AIMS Financial Group (AIMS), which specialises in the investment management of direct property, real estate securities and mortgage assets.

MacarthurCook and AIMS manage over A$1.5 billion on behalf of over 20,000 Investors/borrowers as at 21 December 2010 and are the investment managers for the CWH Australia Trust, MacarthurCook Office Property Trust, MacarthurCook Mortgage Fund, Advance Mortgage Fund, MacarthurCook Property Securities Fund and the RMR Asia Pacific Real Estate Fund. AIMS also manages, in a joint-venture arrangement with AMP Capital, the AIMS-AMP Capital Industrial REIT in Singapore.

The MacarthurCook Property Securities Fund is listed on the ASX and the Singapore Exchange. The AIMS-AMP Capital Industrial REIT is listed on the Singapore Exchange. The RMR Asia Pacific Real Estate Fund is listed on the New York Stock Exchange.

About AIMS Financial Group:

Established in 1991, AIMS Financial Group is an Australian company with a solid track record and enviable reputation in the mortgage and securitisation markets. It has expanded to become an international financial group focusing on funds management, real estate investment, securitisation and mortgage lending.

AIMS is a 100% Australian owned business that has operated in Australia for nearly 20 years. AIMS started in Australia with only two staff and today have in excess of 100 staff in Australia. AIMS has been very active in introducing international investors into the Australian real estate market. During this time AIMS has attracted significant investment in Australian direct property from its international clients. Since 1999, AIMS has raised directly and indirectly approximately A$3 billion in funds from the Australian capital markets, with most of the RMBS (Residential Mortgage Backed Securities) rated AAA by both Standard & Poors and Fitch Ratings.

With offices across Australia and China and highly qualified, professional and experienced cross-cultural teams, AIMS Financial Group bridges the gap between Australia and China in various markets, especially in real estate, resources, technology, infrastructure, banking and financial services.