BLACKWALL LIMITED — Annual Report 2014

Aug 26, 2014

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**June

2014**

Contents

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• BlackWall
Overview Page
2 • Three
Year
Performance Page
3 • ProCit
&
Loss
Summary Page
4 • Balance
Sheet
Summary Page
5 • BlackWall
Property
Trust
(ASX:
BWR) Page
6 • Bakehouse
Quarter Page
7 • BlackWall
Telstra
House
Trust Page
8 • Single
Asset
Syndicates Page
9 • Tankstream
Property
Investments
Fund Page
10 • WOTSO
WorkSpace Page
11 • Distressed
Debt
Mandates Page
12 • Pelathon
Pub
Group Page
13 • More
Information Page
14 Full
Year
Results
–
30
June
2014 2

Full
Year
Results
–
30
June
2014 Page
1

**Vertically

integrated
property funds
management
and investment.**

• Revenue
  generated
  from
  property
  and
  fund management
  fees,
  performance
  fees,
  serviced ofCice
  operations
  and
  investment
  returns.

• Capital
  employed
  in
  underwriting
  fund activities,
  seeding
  new
  ventures
  and
  direct investments.

After
Tax
ProCit NTA Market
Cap $4.1
million $14
million $13.4
million

Full
Year
Results
–
30
June
2014 Page
2

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EPS	8 cps
NTA	28 cps
2014 Dividend*	2.5 cps
Share Price	26.5 cps

*
Fully
franked

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**Three

Year
Performance**

Financial Year	Financial Year			2012	2013		2014
Net proCit	after tax			($3 million)	$2.3 million	$4.1	million
EPS				(6 cps)	4 cps		8 cps
NTA per share				17 cps	21 cps		28 cps
Share price				10 cps	14 cps		25 cps
Total Dividend*				0.5 cps	1.1 cps		2.5 cps
Grossed (cents) *Fully Franked				up Dividend per Share
4.0						3.6
3.5
3.0
2.5
2.0				1.6
1.5
1.0	0.7
0.5
-
Full Year Results – 30 June Page 3 2012		2014		2013		2014

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4
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**ProEit

&
Loss
Summary**

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Full Year 2014
Management Fees	$7,418,000
WOTSO WorkSpace Income	$1,230,000
Investment Income
• Distributions	$556,000
• Asset Sales, Impairment & Revaluations	$1,300,000
Total Income	$10,504,000
Expenses	($4,621,000)
Depreciation	($158,000)
Interest and Tax	($1,674,000)
After Tax ProEit (excludes OEI)	$4,081,000
Earnings Per Share	$0.08
Full Year Results – 30 June 2014 Page 4		5

**Balance

Sheet
Summary**

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June 2014
Cash & Receivables		$2,045,000
Investments
BWR	$6,979,000
Bakehouse Bonds	$5,340,000
Pelathon Pub Group	$1,017,000
TPIF	$444,000
		$13,780,000
Loan Receivable		$465,000
Plant & Equipment		$387,000
Other Assets		$45,000
Liabilities		($2,786,000)
Net Assets (exclude OEI)		$13,996,000
NTA per share		$0.28
Full Year Results – 30 June 2014 Page 5			6

**BlackWall

Property
Trust (ASX:
BWR)**

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• Listed
  diversiCied
  property
  trust
  -­‐
  BlackWall
  assumed control
  in
  2009,
  at
  the
  time
  BWR
  was
  a
  distressed unlisted
  property
  fund.

• “Workout”
  now
  complete
  with
  debt
  at
  45%
  and distributions
  reinstated.

NTA	13.5 cpu
Gross Assets	$116 m
Gearing	45%
Net ProCit	$6.2 m

• BWR
  now
  positioned
  for
  growth
  through
  merger, acquisitions
  and
  development.

• Distributions
  by
  way
  of
  capital
  returns
  due
  to
  carried forward
  tax
  losses
  (revenue
  losses
  of
  $20
  million
  and capital
  losses
  of
  $16
  million).

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7
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• Investor
  spread
  increased
  by
  two
  BWR
  unitholders (trusts
  managed
  by
  BlackWall)
  recently
  completing
  in-­‐ specie
  distributions
  of
  BWR
  holdings
  –142
  million
  BWR units
  distributed
  amongst
  380
  unitholders.

• BlackWall
  holds
  73
  million
  BWR
  units
  (16%).

Full
Year
Results
–
30
June
2014 Page
6

**Bakehouse

Quarter**

• The
  Bakehouse
  Quarter
  is
  a
  signiCicant
  urban
  business precinct
  located
  at
  North
  StrathCield
  in
  Sydney’s
  inner
  west, valued
  at
  over
  $200
  million.

• Key
  commercial
  tenants
  include
  Arnott’s
  Campbell
  Soups, NRMA
  and
  Frucor,
  an
  Aldi
  store
  and
  other
  grocery
  outlets, entertainment
  destinations
  including
  AMF
  Bowling
  and Golfzone,
  and
  a
  collection
  of
  20
  cafes
  and
  restaurants.

• BlackWall’s
  businesses
  have
  controlled
  all
  elements
  of
  the project’s
  development
  and
  funding.

• Tiered
  ownership
  structure
  comprised
  of
  senior
  debt, subordinated
  bonds
  (held
  by
  BlackWall
  and
  BWR)
  and ordinary
  equity
  held
  by
  sophisticated
  investors
  in
  a wholesale
  investment
  trust
  (Kirela
  Development
  Unit
  Trust) and
  retail
  investors
  through
  a
  registered
  managed investment
  scheme
  (Bakehouse
  Quarter
  Trust
  –
  almost
  400 investors).

• The
  project
  has
  over
  40,000
  sqm
  of
  development
  complete with
  the
  capacity
  to
  grow
  to
  over
  100,000
  sqm.

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Asset Value*	$200 m
Senior Debt	$98 m
Subordinated Debt	$25 m
Equity*	$90 m
Gross Revenue*	$15 m

*
Indicative
only

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Full
Year
Results
–
30
June
2014 Page
7

**BlackWall

Telstra
House
Trust**

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• Single
  asset
  syndicate
  with
  signiCicant
  development potential.

• The
  property
  is
  a
  7
  storey
  ofCice
  building
  located
  on Northbourne
  Ave
  in
  the
  ACT
  leased
  to
  Telstra
  until November

• Telstra
  has
  vacated
  the
  building
  with its
  rental
  commitment
  until

Gross Assets	$32.5 m
Gearing	56%
Gross Rent	$3.1 m

• 7,900
  sqm
  of
  GFA
  and
  6,600
  sqm
  in
  land
  area.

• BlackWall
  is
  reviewing
  repositioning
  plans
  including the
  potential
  of
  a
  signiCicant
  residential
  redevelopment scheme
  during
  the
  4
  year
  lease
  tail.

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9
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• The
  property
  is
  located
  in
  the
  Dickson
  retail
  precinct and
  on
  the
  proposed
  Capital
  Metro
  light
  rail
  network.

Full
Year
Results
–
30
June
2014 Page
8

**Single

Asset
Syndicates**

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||||||
|---|---|---|---|---|
|Fund|Type|Tenants|Asset
Value|Structure|
|Toys
R
Us,|
|Boating
Camping
Fishing,|
|BlackWall
Penrith|
|Lifestyle
Centre|Barbeques
Galore,|$17.5
million|Retail
MIS|
|Fund
No.
3|
|Little
Learning
Childcare,|
|Rashay’s
Restaurant|
|AMF
Bowling,|
|Woodville
Road|Entertainment|Chipmunks
Playland,|
|$14
million|Wholesale
trust|
|Villawood
Unit
Trust|Precinct|Sydney
Rock
Climbing,|
|Kartatak|
|Bald
Rock
Fund|Pub|Hotel
operator|$3.1
million|Wholesale
trust|
|Full
Year
Results
–
30
June
2014
Page
9|10|

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**Tankstream

Property Investments
Fund**

• Property
  securities
  fund
  taken
  over
  by
  BlackWall’s fund
  management
  business
  in
• At
  the
  time
  the fund
  was
  distressed
  with
  unsustainable
  debt obligations.

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Gross Assets	$2.9 m
Investors	380

• “Turnaround”
  now
  complete
  with
  the
  trust
  debt-­‐free and
  cash
  Clow
  positive.

• Capital
  returned
  to
  investors
  through
  in-­‐specie distribution
  of
  BWR
  units.

• The
  trust
  has
  $1.8
  million
  carried
  forward
  revenue losses
  and
  $4.4
  million
  capital
  losses.

• BlackWall
  aims
  to
  reposition
  the
  fund
  as
  a
  deep
  value/ special
  opportunity
  investment
  trust.

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11
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Full
Year
Results
–
30
June
2014 Page
10

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• BlackWall’s
  wholly
  owned
  serviced
  ofCice
  business
  with 2,000
  sqm
  in
  operation
  and
  a
  further
  1,800
  sqm
  in
  start up
  phase.
  The
  business’
  EBITDA
  contribution
  was
  $270k in
  2014
  ($110k
  in
  2013).

• The
  business
  re-­‐brands
  as
  WOTSO
  WorkSpace.

• Three
  locations
  in
  Sydney
  and
  a
  fourth
  on
  the
  Gold
  Coast.

• All
  locations
  are
  housed
  in
  commercial
  buildings controlled/managed
  by
  BlackWall.

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12
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• WOTSO
  expands
  its
  services
  to
  include
  shared
  workspace, project
  and
  event
  space.

• In
  addition
  to
  diversifying
  BlackWall’s
  revenue
  WOTSO acts
  as
  a
  tenant
  incubator.
  That
  is,
  when
  clients
  outgrow the
  serviced
  ofCices
  environment
  BlackWall
  aims
  to
  house them
  in
  conventional
  long
  term
  ofCice
  space.

www.wotsoworks pace.com.au

1
800
4
WOTSO

Full
Year
Results
–
30
June
2014 Page
11

**Distressed

Debt
Mandates**

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• BlackWall
  undertakes
  distressed
  debt
  and
  “workout”
  assignments with
  respect
  to
  difCicult
  real
  estate
  positions.

• Where
  appropriate
  BlackWall
  aims
  to
  structure
  co-­‐investments
  using its
  balance
  sheet
  or
  by
  structuring
  investment
  syndicates.

• Currently
  managing
  just
  under
  $100
  million
  of
  distressed
  debt.

Full
Year
Results
–
30
June
2014 Page
12

**Pelathon

Pub
Group**

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• As
  part
  of
  BlackWall’s
  opportunistic
  acquisition
  of
  Tankstream
  Funds Management
  in
  2009
  BlackWall
  took
  control
  of
  a
  distressed
  pub
  fund.

• After
  managing
  the
  workout
  phase
  BlackWall
  sold
  the
  fund
  management
  rights to
  specialist
  pub
  manager,
  Pelathon
  Management
  Group.

• BlackWall
  continues
  to
  act
  as
  the
  fund’s
  responsible
  entity,
  hold
  a
  signiCicant investment
  in
  the
  fund
  ($1.0
  million)
  and
  has
  a
  carried
  interest
  of
  10%
  of Pelathon.

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• BlackWall
  is
  now
  working
  with
  Pelathon
  to
  grow
  the Pub
  Group
  through
  mergers
  or
  acquisitions.

Full
Year
Results
–
30
June
2014 Page
13

**More

Information**

Stuart
Brown Chief
Executive
OfCicer sbrown@blackwallfunds.com.au 0413
921
570

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Tim
Brown Chief
Financial
OfCicer tbrown@blackwallfunds.com.au 0416
925
376

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Year
Results
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30
June
2014 Page
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