TIAN AN AUSTRALIA LIMITED - Proxy Solicitation & Information Statement 2014

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ACN 009 134 114

NOTICE OF GENERAL MEETING

Date and time of meeting

Wednesday, 2 April 2014 at 10.00am (Sydney time)

Place of meeting

Intercontinental Hotel, 117 Macquarie Street, Sydney NSW 2000

Important notice

This Notice of Meeting, the accompanying Explanatory Notes and the attached Independent Expert’s Report should be read in its entirety.

The business to be conducted at the Meeting includes:

the consideration of the Company acquiring the right to participate in the developments of Yang Land (Point Cook, Victoria) ( Yang Land ) and The Milton (Milton, Queensland) ( The Milton ); and
the issuing of Options to Non-Executive Directors.

The Independent Expert has concluded that approving the right to participate in the developments of Yang Land and The Milton is fair and reasonable to non-associated Shareholders.

If Shareholders are in doubt as to how they should vote, they should seek advice from their accountant, solicitor or other professional adviser without delay.

NOTICE OF GENERAL MEETING 2 APRIL 2014

PBD Developments Limited ACN 009 134 114 (Company)

Notice is hereby given that a general meeting of the Company will be held at:

Date : Wednesday, 2 April 2014

Time : 10.00am (Sydney time)

Place : Intercontinental Hotel, 117 Macquarie Street, Sydney NSW 2000

Business

Resolution 1 - Approval to acquire the right to participate in the development of Yang Land

To consider and, if thought fit, to pass the following resolution as an ordinary resolution:

That, for the purposes of ASX Listing Rules 10.1 & 10.5 and for all other purposes, approval is given for the Company to acquire the right to participate in the development of Yang Land located at Point Cook in Victoria on the terms and conditions of the Project Delivery Deed between the Company and FKP Residential Developments Pty Ltd described in the Explanatory Notes accompanying the Notice of General Meeting.

Independent Expert's Report

The Independent Expert has concluded that the Company participating in the development of Yang Land on the terms and conditions of the Project Delivery Deed between the Company and FKP Residential Developments Pty Ltd ( FKPRD ) described in the Explanatory Notes accompanying the Notice of General Meeting is fair and reasonable to non-associated Shareholders.

Resolution 2 - Approval to acquire the right to participate in the development of The Milton

To consider and, if thought fit, to pass the following resolution as an ordinary resolution:

That, for the purposes of ASX Listing Rule 10.1 and for all other purposes, approval is given for the Company to acquire the right to participate in the development of The Milton located at 55 Railway Terrace, Milton in Queensland on the terms and conditions of the Development Agreement between the Company and FKP Commercial Developments Pty Ltd described in the Explanatory Notes accompanying the Notice of General Meeting.

Independent Expert's Report

The Independent Expert has concluded that the Company participating in the development of The Milton on the terms and conditions of the Development Agreement between the Company and FKP Commercial Developments Pty Ltd ( FKPCD ) described in the Explanatory Notes accompanying the Notice of General Meeting is fair and reasonable to non-associated Shareholders.

Resolutions 1 and 2 - Voting exclusion statement

The Company will disregard any votes cast on Resolutions 1 and 2 by FKPRD and FKPCD respectively, any party to the transaction and any of its associates.

However, the Company will not disregard a vote if it is cast by:

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(a) the person as proxy for a person who is entitled to vote (in accordance with the directions on the proxy form); or
(b) a person chairing the General Meeting as proxy for a person who is entitled to vote (in accordance with a direction on the proxy form to vote as the proxy decides).

You may be liable for breach of the voting restrictions in the Corporations Act if you cast a vote that the Company disregards.

Resolution 3 – Approval for the issue of options to Mr David Hunt

To consider, and if thought fit, to pass the following resolution as an ordinary resolution:

That, for the purposes of Listing Rule 10.11, section 195(4) of the Corporations Act and for all other purposes, approval is given for the Directors to allot and issue 16,666,666 options to Mr David Hunt on the terms and conditions described in the Explanatory Notes accompanying the Notice of General Meeting.

Resolution 4 – Approval for the issue of options to Ms Cerena Fu

To consider, and if thought fit, to pass the following resolution as an ordinary resolution:

That, for the purposes of Listing Rule 10.11, section 195(4) of the Corporations Act and for all other purposes, approval is given for the Directors to allot and issue 16,666,666 options to Ms Cerena Fu on the terms and conditions described in the Explanatory Notes accompanying the Notice of General Meeting.

Resolution 5 – Approval for the issue of options to Mr Marcus Seow

To consider, and if thought fit, to pass the following resolution as an ordinary resolution:

That, for the purposes of Listing Rule 10.11, section 195(4) of the Corporations Act and for all other purposes, approval is given for the Directors to allot and issue 16,666,666 options to Mr Marcus Seow on the terms and conditions described in the Explanatory Notes accompanying the Notice of General Meeting.

Resolutions 3 to 5 - Voting exclusion statement

In accordance with the ASX Listing Rules, the Company will disregard any votes cast on the respective Resolutions cast by or on behalf of the following persons and their associates:

Resolution 3: Mr David Hunt

Resolution 4: Ms Cerena Fu
Resolution 5: Mr Marcus Seow

However, the Company need not disregard a vote on Resolutions 3 to 5 if it is cast by:

(a) the person as proxy for a person who is entitled to vote (in accordance with the directions on the proxy form); or
(b) a person chairing the General Meeting as proxy for a person who is entitled to vote (in accordance with a direction on the proxy form to vote as the proxy decides).

Important information concerning proxy votes on Remuneration related to Resolutions 3 to 5

The Corporations Act prohibits Key Management Personnel ( KMP ) and their Closely Related Parties from voting on resolutions connected directly or indirectly with the remuneration of a member of the KMP. Accordingly, the Company’s KMP and their Closely Related Parties are prohibited from voting on Resolutions 3 to 5 to approve the issue of Options to members of the Board.

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However, a member of the Company’s KMP, or a Closely Related Party of such a member, may cast a vote on Resolutions 3 to 5 if:

(a) they do so as a proxy appointed in writing that specified how the proxy is to vote on the proposed Resolution; and
(b) the vote is not cast on behalf of a member of KMP, or a Closely Related Party.

If you appoint the Chairman as your proxy (whether intentionally or by default) you can direct the Chairman of the Meeting to vote for, against or abstain from voting on Resolutions 3 to 5 by marking the appropriate box on the proxy form, under the heading ‘Appoint a Proxy to Vote on Your Behalf’.

If you appoint the Chairman as your proxy (whether intentionally or by default) and do not direct the Chairman how to vote in respect of Resolutions 3 to 5, then the Chairman may not cast your votes in relation to those Resolutions. To avoid this, mark the relevant box on the proxy form authorising the Chairman to cast undirected proxies in favour of Resolutions 3 to 5. This express authorisation contained in your proxy form acknowledges that the Chairman may vote your proxy in favour of Resolutions 3 to 5, even though it is connected directly or indirectly with the remuneration of a member of the KMP for the Company, which includes the Chairman.

For the purposes of this Notice (including each of the Resolutions), the following definitions apply:

" Closely Related Party ", in relation to a member of the KMP, means the member's spouse, child or dependent (or a child or dependent of the member's spouse), anyone else in the member's family who may be expected to influence or be influenced by the member in the member's dealings with the Company (or its controlled entities), and any company the member controls.
" Corporations Act " means the Corporations Act 2001 (Cth).
" Key Management Personnel " or " KMP " means those persons having authority and responsibility for planning, directing and controlling the activities of the Company or its controlled entities, whether directly or indirectly. Members of the KMP include Directors (both Executive and Non-Executive) and certain senior executives.

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Nicole Moodie Company Secretary 28 February 2014

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Explanatory Notes

These Explanatory Notes contain background materials to assist Shareholders in relation to the items of business to be considered at the General Meeting and in deciding how to vote on the resolutions set out in the Notice of General Meeting.

These Explanatory Notes are an important document and should be read carefully and in its entirety before making any decision in relation to the resolutions set out in the Notice of General Meeting.

Resolution 1 – Approval to acquire the right to participate in the development of Yang Land

Subject to Shareholder approval being granted under this resolution, the Company and FKP Residential Developments Pty Ltd ( FKPRD ) have entered into a project delivery deed dated 3 December 2013 ( Project Delivery Deed ) pursuant to which the Company has agreed to acquire a right to co-operate with FKPRD in the proposed development of Yang Land, Point Cook ( Land ) to create residential lots ( Project ).

The Project is in line with the Company’s strategy to diversify its geographical footprint and expand its development pipeline on Australia’s eastern seaboard. The Project presents itself as a unique opportunity to replicate the Company’s expertise in the identification of large urban land to develop into residential communities.

The material terms of the Project Delivery Deed are as follows:

Conditions Precedent

(a) The rights and obligations of the parties are subject to the satisfaction of the following conditions precedent by 11 April 2014:
(i) FKPRD obtaining the approval of its relevant lenders to enter into the transactions contemplated by the Project Delivery Deed;
(ii) the Company obtaining the approval of its Shareholders under the Corporations Act and ASX Listing Rules for it to enter into the transactions contemplated by the Project Delivery Deed;
(iii) the Company obtaining Foreign Investment Review Board approval to enter into the transactions contemplated by the Project Delivery Deed; and
(iv) FKPRD obtaining all necessary permits, consents and approvals from any Commonwealth, state, regional and local government or other regulatory authority, body or agency, and any court or tribunal or statutory corporation (on terms and conditions reasonably acceptable to the Company) for the subdivision of the Land.

Development

(b) FKPRD will undertake the development of the Land to create residential lots ( Lots ) with the assistance of services to be provided by the Company in accordance with a program for completion as agreed between the parties.
(c) The Project Delivery Deed commenced on 3 December 2013 ( Commencement Date ) and will continue until the earliest of:
(i) the sale and settlement of all of the Lots that are to be created upon the subdivision of the Land;
(ii) termination of the Project Delivery Deed by either party in accordance with its terms; or
(iii) mutual agreement between the parties to terminate the Project Delivery Deed.
(d) In consideration for the appointment of the Company to assist with the development of the Land and the payment by FKPRD to the Company of the development services fee (as defined below), the Company must pay FKPRD a total participation fee of $18,000,000 ( Participation

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Fee ), payable in specified tranches upon certain specified milestones and in any event 18 months from the Commencement Date.

(e) FKPRD will pay the to the Company the difference between the sale proceeds and the GST payable by FKPRD in respect of the sale of a Lot created upon the subdivision of the Land ( Development Services Fee ). All sale proceeds from the sales of Lots created by FKPRD to third parties will be collected by FKPRD and used by FKPRD firstly to pay any GST payable in relation to any sale contract as it falls due.

FKPRD Works

(f) The Company must pay all costs, contributions, expenses, fees and other charges ( Work Costs ) in respect of the works and activities required to carry on the proposed development of the Land to create Lots ( Development Works ) on a progressive basis following the settlement of the sale of Lots to end purchasers.
(g) On the Commencement Date, in consideration of the procurement and management of the Development Works, the Company must pay FKPRD a management fee of $200,000.
(h) FKPRD must subdivide the Land and ensure that all titles are issued in the name of FKPRD (unless otherwise agreed).
(i) Subject to the payment by the Company of the Work Costs, FKPRD is responsible for all costs, expenses and registration fees in respect of each such plan of subdivision.

Sale of Lots to End Purchasers

(j) FKPRD remains the legal and beneficial owner of the Land and will enter into contracts (as vendor) to sell the Lots within the development to end purchasers.
(k) In respect of the sale of the Lots, the Company:
(i) must, at its cost, prepare the sale contracts in respect of the Lots (in a form approved by FKPRD);
(ii) must, at its cost, prepare the necessary vendor statements (including undertaking all necessary searches) in respect of the Lots; and
(iii) will be responsible for the marketing and sale of all Lots.
(l) FKPRD will grant a power of attorney to the Company to enable the Company to sign sale contracts, vendor's statements and other land transfer-related documents on behalf of FKPRD for the purpose of facilitating the sale of Lots to end purchasers.

Put Option

(m) The Company grants FKPRD an option to require the Company to acquire that part of the Land that has not been transferred to an End Purchaser by 18 months from the date of the Project Delivery Deed ( Sunset Date ) for a price equivalent to the balance of the
Participation Fee and on substantially similar terms as a contract for the sale of Lots to third parties in a form adopted in accordance with the terms of the Project Delivery Deed ( Put Option ). This put option remains exercisable by FKPRD for 3 months following the Sunset Date. Upon settlement of a contract of sale pursuant to this put option:
(i) the Company must pay any amounts owing to FKPRD in relation to the Works Costs or the Management Fee; and
(ii) the Project Delivery Deed will come to an end.

Termination

(n) Either party may terminate the Project Delivery Deed, upon notice, if the other party:
(i) breaches a provision of the Project Delivery Deed and fails to remedy the breach within 14 business days after receiving notice of the requirement to do so;
(ii) breaches a material provision of the Project Delivery Deed which is not capable of remedy; or
(iii) is subject to an event of insolvency.

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Approval requirements

ASX Listing Rule 10.1 provides that, among other things, the Company (or any of its subsidiaries) must not acquire a ‘substantial asset’ from, or dispose of a ‘substantial asset’ to, a person who is a ‘substantial holder’ of shares in the Company without the approval of Shareholders. A person is a ‘substantial holder’ if that person and their associates have a relevant interest, or had a relevant interest at any time in the six months prior to the transaction, in at least 10% of the total votes attached to the Company’s securities.

ASX Listing Rule 10.5 applies ASX Listing Rule 10.1 to put and call options and, having regard to the terms of the Project Delivery Deed, requires that the Company obtain the approval of Shareholders for the Put Option before it is "issued".

FKPRD is a wholly owned subsidiary of Aveo Group Limited ( Aveo ) and is therefore an associate of Aveo. Aveo held a relevant interest in more than 10% of the total votes attached to the Company’s securities until 9 August 2013 and is deemed to have maintained this interest for the purposes of ASX Listing Rule 10.1 until 9 February 2014 (which includes the period during which the Company agreed to enter into the Project Delivery Deed). The Company has determined that FKPRD should therefore be treated as a 'substantial Shareholder' for the purposes of ASX Listing Rule 10.1.

Under ASX Listing Rule 10.2, a ‘substantial asset’ is an asset whose value, or the value of the consideration paid for it, is, or in ASX’s opinion is, 5% or more of the equity interests of the Company as set out in the latest accounts given to ASX under the Listing Rules. The value of the Participation Fee that the Company will pay FKPRD in order to acquire its interest in the Project exceeds 5% of the value of the equity interests of the Company set out in the most recent accounts given to ASX by the Company under the Listing Rules. Therefore, approval under ASX Listing Rule 10.1 is required for the transaction contemplated by the Project Delivery Deed .

In accordance with ASX Listing Rule 10.10, the Independent Expert has been asked to prepare a report on whether the transaction that the Company is proposing to enter into under the Project Delivery Deed is fair and reasonable. The Independent Expert has concluded that this transaction is fair and reasonable to non-associated Shareholders. Please refer to the Independent Expert’s Report attached as Annexure A to this Notice of General Meeting.

The giving of a financial benefit to a related party of the Company would also usually require Shareholder approval pursuant to section 208 of the Corporations Act. However, there are various exceptions to the requirement for member approval. This includes, in accordance with section 210 of the Corporations Act, where the benefit is given on terms that would be reasonable in the circumstances if the Company and the related party were dealing at arm's length.

The Directors are of the view that the exception in section 210 of the Corporations Act is relevant to the Company entering into the Project Delivery Deed because the Project Delivery Deed (including the arrangements concerning the Participation Fee) is on terms that would be reasonable in the circumstances if the Company and FKPRD were dealing at arm's length. Accordingly, the Company is not seeking the approval of members under section 208 of the Corporations Act.

Directors’ recommendation

All of the Directors other than Winson Chow and David Hunt have considered the potential advantages and disadvantages of the transaction contemplated by the Project Delivery Deed and the Independent Expert's conclusions and each of them RECOMMEND that Shareholders vote in favour of this resolution.

Winson Chow is an alternate director of Aveo and David Hunt is the Chief Financial Officer of Aveo. Accordingly, Mr Chow and Mr Hunt consider that it is inappropriate for them to make a recommendation to Shareholders in respect of this resolution.

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Resolution 2 – Approval to acquire the right to participate in the development of The Milton

Subject to Shareholder approval being granted under this resolution, the Company and FKP Commercial Developments Pty Ltd ( FKPCD ) have entered into a development agreement dated 6 January 2014 ( Development Agreement ) pursuant to which the Company has agreed to acquire a right to participate along with FKPCD in the proposed mixed-use development known as the "The Milton" located at 55 Railway Terrace, Milton in Queensland ( Project ).

The Project is in line with the Company’s strategy to diversify its geographical footprint and expand its development pipeline on Australia’s eastern seaboard. The Project presents itself as a unique opportunity to participate in a residential, commercial and retail development situated on the fringe of the Brisbane CBD.

The material terms of the Development Agreement are as follows:

Conditions

(a) The rights and obligations of the parties are subject to two conditions precedent. The first is that the Company obtain the approval of its Shareholders under the Corporations Act or ASX Listing Rules in order to undertake the transactions contemplated by the Development Agreement. The second is that the Company gives notice to the Foreign Investment Review Board of its intention to enter into the Development Agreement and no objection is raised in respect of that notice.

Development

(b) The parties will co-operate in the performance and delivery of the construction, design, marketing and sales for the Project, which is located on land owned by FKPCD.

(c) The Development Agreement will commence on the date the parties enter into it ( Commencement Date ) and will continue until terminated in accordance with its terms (including, for example, if a condition precedent is not satisfied) or the final distribution of all income from the Project between the parties has been completed.
(d) The parties will work together to procure project finance for the Project. The borrower under the relevant facilities will be FKPCD, and if required by the financier, the Company jointly. If the Company is not a borrower, the Company shall guarantee the Project Finance. The only security provided will be the land owned by FKPCD on which the Project is located with the facilities otherwise being non-recourse to the parties.

The Project

(e) On the Commencement Date, a Participation Fee will become payable (in two tranches) under the Development Agreement in consideration for the work that FKPCD will have carried out to that date in relation to the Project, including obtaining development approvals, administering the tender process to engage a builder and obtaining pre-sale commitments. The Company must pay FKPCD a deposit on the Participation Fee of $100,000 on the Commencement Date, with the balance of $22,200,000 due on or before 15 June 2014 subject to FKPCD complying with certain obligations under the Development Agreement and the conditions being satisfied or waived.
(f) From the Commencement Date, the parties will:
(i) each be liable for 50% of the costs associated with, and be entitled to receive 50% of the income generated by the Project;
(ii) jointly co-ordinate and control the development of the Project as determined by a project control group ( PCG ), which will have equal representation for each of the parties. Among other things, the PCG will determine the sale price for each apartment to be sold in the Project and the terms of sale.

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Interest of Participant Unsecured

(g) The interests of each party in the Project under the Development Agreement will be unsecured as between themselves and are only permitted to grant an encumbrance over their rights under the Development Agreement with the prior written consent of the other party, which shall not be unreasonably withheld.
(h) If one party is in default under the Development Agreement and that default is not, or cannot, be remedied then the non-defaulting party may exercise an option to acquire the defaulting party's interest in the Project at fair market value.

Approval requirements

FKPCD is a wholly owned subsidiary of Aveo Group Limited ( Aveo ) and is therefore an associate of Aveo. Aveo held a relevant interest in more than 10% of the total votes attached to the Company’s securities until 9 August 2013 and is deemed to have maintained this interest for the purposes of ASX Listing Rule 10.1 until 9 February 2014 (which includes the period during which the Company agreed to enter into the Development Agreement). The Company has determined that FKPCD should therefore be treated as a 'substantial Shareholder' for the purposes of ASX Listing Rule 10.1.

Under ASX Listing Rule 10.2, a ‘substantial asset’ is an asset whose value, or the value of the consideration paid for it, is, or in ASX’s opinion is, 5% or more of the equity interests of the Company as set out in the latest accounts given to ASX under the Listing Rules. The value of the Participation Fee that the Company will pay FKPCD in order to acquire its interest in the Project exceeds 5% of the value of the equity interests of the Company set out in the most recent accounts given to ASX by the Company under the Listing Rules. Therefore, approval under ASX Listing Rule 10.1 is required for the transaction contemplated by the Development Agreement .

In accordance with ASX Listing Rule 10.10, the Independent Expert has been asked to prepare a report on whether the transaction that the Company is proposing to enter into under the Development Agreement is fair and reasonable. The Independent Expert has concluded that this transaction is fair and reasonable to non-associated Shareholders. Please refer to the Independent Expert’s Report attached as Annexure A to this Notice of General Meeting.

The Directors are of the view that the exception in section 210 of the Corporations Act is relevant to the Company entering into the Development Agreement because the Development Agreement (including the arrangements concerning the Participation Fee) is on terms that would be reasonable in the circumstances if the Company and FKPCD were dealing at arm's length. Accordingly, the Company is not seeking the approval of members under section 208 of the Corporations Act.

Directors’ recommendation

All of the Directors other than Winson Chow and David Hunt have considered the potential advantages and disadvantages of the transaction contemplated by the Development Agreement and the Independent Expert's conclusions and each of them RECOMMEND that Shareholders vote in favour of this resolution.

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Resolutions 3 to 5: Issue of Options to Non-Executive Directors

Resolutions 3 to 5 seek Shareholder approval in accordance with Listing Rule 10.11, section 195(4) of the Corporations Act and for all other purposes for the grant of 49,999,998 options ( Options ) to be split equally between Mr David Hunt, Ms Cerena Fu and Mr Marcus Seow, who are each Non-Executive Directors of the Company.

It is proposed that the Options be issued to Mr Hunt, Ms Fu and Mr Seow as additional remuneration in order to:

reward each of them for the workload they have undertaken during the Company's recent transitional period (which has seen the Company refinance its major debt facilities, enter into important new transactions and increase its market capitalisation from $5.9 million on 28 December 2012 to $74.2 million on 24 October 2013); and
allow the Company to adequately compensate Mr Hunt, Ms Fu and Mr Seow for their commitment to the Company and to incentivise them to retain their positions with the Company and to continue to contribute to the Company's development and growth.

The members of the Board have formed the view that it would be appropriate to issue the Options, subject to Shareholder approval, because it considers that the issue would be reasonable in the circumstances having regard to the present circumstances of the Company and the following considerations:

competition in the markets in which the Company operates for experienced company Directors and the importance of such Directors to the future development and growth of the Company;
issuing the Options would be a cost-effective mechanism for the Company to reward its NonExecutive Directors for their efforts during its recent transition and encourage those Directors to remain involved in the Company's affairs going forward;
in the Company's current circumstances, it would benefit the Company to provide additional remuneration to its Non-Executive Directors by way of scrip rather than having to increase its costs by increasing the amount of remuneration received by those Directors in cash;
the Options would provide a way for the Company to provide additional remuneration to its NonExecutive Directors while strengthening the alignment between the interests of those Directors and the interests of the Company;
there do not appear to be any significant opportunity costs to the Company or benefits foregone by the Company is issuing the Options upon the terms proposed.

The table below provides information relating to the effect that the issue of Options as contemplated by Resolutions 3 to 5 will have upon the remuneration of Mr Hunt, Ms Fu and Mr Seow.

	David Hunt	Cerena Fu	Marcus Seow
Number of ordinary shares currently held	Nil	Nil	Nil
Number of options currently held	Nil	Nil	Nil
Number of Options proposed to be granted	16,666,666	16,666,666	16,666,666
Current annual remuneration including superannuation	$43,700	$43,700	$43,700
Consideration for Options to be granted	Nil	Nil	Nil

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The value of each Option will be calculated by an Independent Expert advisor using a Black-Scholes based pricing model at the date of issue.

Approval Requirements

ASX Listing Rules

ASX Listing Rule 10.11 requires a listed company to obtain Shareholder approval prior to the issue of securities (including an option) to a related party. As Directors of the Company, Mr Hunt, Ms Fu and Mr Seow are considered related parties of the Company. Accordingly, Shareholder approval is required under ASX Listing Rule 10.11 for the issue of the Options.

ASX Listing Rule 10.13 sets out a number of matters which must be included in a notice of meeting for a proposed approval under Listing Rule 10.11. The following information is provided to Shareholders for the purposes of Listing Rule 10.13 to allow them to assess the proposed issue of Options under Resolutions 3 to 5:

(a) the Options will be granted to Mr David Hunt, Ms Cerena Fu and Mr Marcus Seow, each of whom is a Non-Executive Director of the Company, for incentive and remuneration purposes as set out above;
(b) the maximum total number of Options to be issued under Resolutions 3 to 5 is 49,999,998 as outlined in the table above;
(c) the Options will be issued no later than one month after the date of the General Meeting (or such later date as permitted by any ASX waiver or modification of the ASX Listing Rules, the Corporations Act and/or the Australian Securities and Investments Commission);
(d) while there is no consideration for the issue of the Options, the exercise price of the options will be $0.02 per new ordinary share in the Company and the options will expire on 31 March 2016. The full terms and conditions are set out in Annexure B to this Notice of General Meeting;
(e) a voting exclusion statement is included in Resolutions 3 to 5 in the Notice; and
(f) there will be no funds raised from the issue of the Options (which will be issued for nil consideration) and any funds raised from the exercise of the Options will be applied toward the Company's working capital requirements at that time.

Approval under ASX Listing Rule 7.1 is not required if the same issue is approved by Shareholders pursuant to ASX Listing Rule 10.11 (as provided for by ASX Listing Rule 7.2, exception 14).

- Corporations Act Chapter 2E

Chapter 2E of the Corporations Act prohibits a listed company from giving a financial benefit to a related party of the company except where:

(a) the giving of the financial benefit falls within one of the exceptions set out in Chapter 2E (in this case the applicable exception is section 211 as described below); or
(b) Shareholder approval is obtained before giving the financial benefit.

As Directors of the Company, Mr Hunt, Ms Fu and Mr Seow are each a related party of the Company for the purposes of Chapter 2E of the Corporations Act and the proposed issue of securities is considered a financial benefit.

Section 211 of the Corporations Act provides that one of the exceptions to obtain Shareholder approval for giving a financial benefit to a related party is where the benefit is given to the related party as an officer of the Company and to give the remuneration would be reasonable given the circumstances of the Company and the related party's circumstances (including the responsibilities involved in the office or employment).

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The members of the Board considers the proposed issue of the Options to the Non-Executive Directors the subject of Resolutions 3 to 5 to be reasonable remuneration for each of those Directors and, as such, falls within the exception set out in section 211 of the Corporations Act. In reaching this view, the Board had regard to the responsibilities of each Non-Executive Director, the terms of the Options, the present circumstances of the Company and the other considerations relating to the issue of the Options identified earlier in these notes.

Corporations Act - Section 195

Section 195 of the Corporations Act essentially prohibits a Director of a public company from attending or voting during Board meetings when matters in which that Director has a material personal interest are being considered.

Each of Mr Hunt, Ms Fu and Mr Seow may each have a personal interest in Resolutions 3, 4 and 5 respectively. In the absence of Shareholder approval for the purposes of section 195(4) of the Corporations Act, the Directors may not be able to properly form a quorum for the Board to carry out the matters contemplated by those resolutions. The Board therefore considers it would be prudent to obtain this approval.

The Board is not aware of any other information that might be reasonably required by Shareholders in order to allow them to make a decision whether it is in the best interests of the Company to pass Resolutions 3 to 5.

Directors' recommendation

Given the nature of Resolutions 3 to 5, all of the Directors consider that it would be inappropriate for them to make a recommendation to Shareholders.

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Voting Information

Voting entitlements

In accordance with regulation 7.11.37 of the Corporations Regulations 2001, the Company has determined that the shareholding of each person for the purpose of determining entitlements to attend and vote at the General Meeting will be the entitlement of that person set out in the Company’s share register as at 7.00pm (Sydney time) on Monday, 31 March 2014 . Accordingly, transactions registered after that time will be disregarded in determining entitlements to attend and vote at the Meeting.

Voting in person

A member that is an individual may attend and vote in person at the General Meeting. If you wish to attend the General Meeting, please bring the enclosed proxy form to the General Meeting to assist in registering your attendance and number of votes. Please arrive at least 15 minutes prior to the start of the General Meeting to facilitate this registration process.

A member that is a corporation may appoint an individual to act as its representative to vote at the Meeting in accordance with section 250D of the Corporations Act. The appropriate original “Certificate of Appointment of Corporate Representative” should be produced prior to admission. A form of the certificate may be obtained from the Company’s share registry or at www.computershare.com.au.

Voting by proxy

A Shareholder who does not wish to attend the General Meeting may appoint a proxy to attend and vote on their behalf. A proxy need not be a Shareholder. A Shareholder who is entitled to cast 2 or more votes may appoint 2 proxies and may specify the proportion or numbers of votes each proxy is appointed to exercise. A Shareholder wishing to appoint a second proxy may copy the enclosed form.

An instrument of proxy which is valid and effective except that it does not specify an appointee in respect of any of the shares in the Company of the relevant Shareholder is to be treated as validly appointing the Chairman of the General Meeting as proxy in respect of all of the shares of that Shareholder. Where a Shareholder in a valid instrument of proxy directs the appointee to vote in a specified way in respect of a particular item of interest at the General Meeting:

(a) the appointee must cast or abstain from casting (as the case may be) a vote on that item of business; and
(b) the appointee must, on a poll, cast the votes to which he/she has direction by the reason of the instrument of proxy in accordance with that direction,

But, if in respect of any vote in respect of that item of business, the Shareholder does not on the instrument of proxy indicate how the appointee is to cast that vote, the appointee may cast, or abstain from casting that vote as the appointee determines. Where the Chairman is appointed as the proxy, the Chairman intends to vote undirected proxies in favour of all items of business.

To be effective, a duly completed Proxy Form (and any power of attorney under which it is signed) must be received by the Company no later than 10.00am on Monday, 31 March 2014 , being 48 hours before the commencement of the General Meeting. Facsimile forms are acceptable.

Proxy forms may be lodged by posting or facsimile to the Company as follows:

Post address: PBD Developments Limited c/- Computershare Investor Services Pty Limited GPO Box 242 Melbourne VIC 3001 Australia Facsimile: (within Australia) 1800 783 447 (outside Australia) +61 3 9473 2555

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You may also submit your proxy form online at www.investorvote.com.au or by scanning the QR code on the proxy form with your mobile device. You will need your Shareholder Reference Number (SRN) or Holder Identification Number (HIN) which is printed on the attached proxy form.

For Intermediary Online Subscribers only (custodians) please visit www.intermediaryonline.com to submit your voting intentions.

Corporate Representatives

Where a body corporate authorises a person to act as its representative at the General Meeting, an instrument of appointment as the corporation’s representative for voting purposes under Section 250D of the Corporations Act 2001 (Cth) must be received by the Company in writing under the Common Seal or under the hand of a duly authorised officer of the corporation.

The instrument of appointment as the corporations representative (duly completed) must be received by the Company no later than 10.00am on Monday, 31 March 2014 , being 48 hours before the commencement of the General Meeting.

Corporate Representative Appointment Forms may be lodged by posting or facsimile to the Company as follows:

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Annexure A – Independent Expert’s Report

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15 | P a g e

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PBD Developments Limited Independent expert’s report and Financial Services Guide 14 February 2014

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Financial Services Guide What is a Financial Services Guide?

This Financial Services Guide (FSG) provides important information to assist you in deciding whether to use our services. This FSG includes details of how we are remunerated and deal with complaints.

Where you have engaged us, we act on your behalf when providing financial services. Where you have not engaged us, we act on behalf of our client when providing these financial services, and are required to give you an FSG because you have received a report or other financial services from us.

What financial services are we licensed to provide?

We are authorised to provide financial product advice and to arrange for another person to deal in financial products in relation to securities, interests in managed investment schemes, government debentures, stocks or bonds and related regulated emissions units (i.e., carbon) to retail and wholesale clients. We are also authorised to provide general financial product advice relating to derivatives to retail clients and personal financial product advice relating to derivatives to wholesale clients.

Our general financial product advice

Where we have issued a report, our report contains only general advice. This advice does not take into account your personal objectives, financial situation or needs. You should consider whether our advice is appropriate for you, having regard to your own personal objectives, financial situation or needs.

If our advice is provided to you in connection with the acquisition of a financial product you should read the relevant offer document carefully before making any decision about whether to acquire that product.

How are we and all employees remunerated?

We will receive a fee of approximately $55,000 exclusive of GST in relation to the preparation of this report. This fee is not contingent upon the success or otherwise of the proposed transaction between PBD Developments Limited and Aveo Group Limited (Aveo Group) (the Proposed Acquisition).

Other than our fees, we, our directors and officers, any related bodies corporate, affiliates or associates and their directors and officers, do not receive any commissions or other benefits.

All employees receive a salary and while eligible for annual salary increases and bonuses based on overall performance they do not receive any commissions or other benefits as a result of the services provided to you. The remuneration paid to our directors reflects their individual contribution to the organisation and covers all aspects of performance.

We do not pay commissions or provide other benefits to anyone who refers prospective clients to us.

Associations and relationships

We are ultimately controlled by the Deloitte member firm in Australia (Deloitte Touche Tohmatsu). Please see www.deloitte.com/au/about for a detailed description of the legal structure of Deloitte Touche Tohmatsu.

The following represents a summary of work performed by Deloitte Corporate Finance Pty Limited (and other entities related to Deloitte Touche Tohmatsu) over the past one year:

Deloitte Corporate Finance Pty Limited prepared an independent expert’s report for PBD in relation to the refinancing of PBD lending facilities.

The services were unrelated to the Proposed Acquisition.

What should you do if you have a complaint?

If you have any concerns regarding our report or service, please contact us. Our complaint handling process is designed to respond to your concerns promptly and equitably. All complaints must be in writing to the address below.

If you are not satisfied with how we respond to your complaint, you may contact the Financial Ombudsman Service (FOS). FOS provides free advice and assistance to consumers to help them resolve complaints relating to the financial services industry. FOS’ contact details are also set out below.

The Complaints Officer Financial Ombudsman Services PO Box N250 GPO Box 3 Grosvenor Place Melbourne VIC 3001 Sydney NSW 1220 [email protected] [email protected] www.fos.org.au Fax: +61 2 9255 8434 Tel: 1300 780 808 Fax: +61 3 9613 6399

What compensation arrangements do we have?

Deloitte Australia holds professional indemnity insurance that covers the financial services provided by us. This insurance satisfies the compensation requirements of the Corporations Act 2001 (Cth).

1 February 2013

Deloitte Corporate Finance Pty Limited, ABN 19 003 833 127, AFSL 241457 of Level 1 Grosvenor Place, 225 George Street, Sydney NSW 2000 Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee, and its network of member firms, each of which is a legally separate and independent entity. Please see www.deloitte.com/au/about for a detailed description of the legal structure of Deloitte Touche Tohmatsu Limited and its member firms.

Member of Deloitte Touche Tohmatsu Limited

Deloitte Corporate Finance Pty Limited A.B.N. 19 003 833 127 AFSL 241457

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Grosvenor Place 225 George Street Sydney NSW 2000 PO Box N250 Grosvenor Place Sydney NSW 1220 Australia

DX 10307SSE Tel: +61 (0) 2 9322 7000 Fax: +61 (0) 2 9322 7001 www.deloitte.com.au

The Directors PBD Developments Limited 99 Macquarie Street Sydney NSW 2000

14 February 2014

Dear Directors

Independent expert’s report

Introduction

On 15 October 2013, PBD Developments Limited (PBD) announced that, subject to shareholder approval, it intends to acquire the following from Aveo Group Limited (formerly FKP Property Group Limited) (Aveo Group) (the Proposed Acquisitions):

a 50% participating interest in The Milton project located in Milton, Queensland (The Milton)
a participating interest in the development of a 14 hectare non-contiguous en-globo site, known as Yang Land, forming a part of the Saltwater Coast residential estate in Point Cook, Victoria (the Yang Land)

(collectively the Interests).

Purpose of the report

The Proposed Acquisitions involve the acquisition of assets from Aveo Group.

Aveo Group held a relevant interest in more than 10% of the total votes attached to PBD’s securities until 9 August 2013 and is deemed to have maintained this interest for the purposes of Australian Securities Exchange (ASX) Listing Rule 10.1 until 9 February 2014 (which includes the period during which PBD agreed to enter into the project delivery deed for the Yang Land and the development agreement for The Milton).

ASX Listing Rule 10.1 provides that, among other things, a company (or any of its subsidiaries) must not acquire a ‘substantial asset’ from, or dispose of a ‘substantial asset’ to, a person who is a ‘substantial holder’ of shares in the company without the approval of shareholders. A person is a ‘substantial holder’ if that person and their associates have a relevant interest, or had a relevant interest at any time in the six months prior to the transaction, in at least 10% of the total votes attached to the company’s securities.

In accordance with ASX Listing Rule 10.10, the directors of PBD (the Directors) have requested that Deloitte Corporate Finance Pty Limited (Deloitte Corporate Finance) provide an independent expert’s report advising whether, in our opinion, the Proposed Acquisitions are fair and reasonable.

This report is to be included in the notice of the meeting to approve the Proposed Acquisitions (the Notice of Meeting), which will be sent to PBD’s Shareholders not associated with the Proposed Acquisitions (Non-associated Shareholders), and has been prepared for the exclusive purpose of assisting Non-associated Shareholders in their consideration of the Proposed Acquisition. Neither Deloitte Corporate Finance, Deloitte Touche Tohmatsu, nor any member or employee thereof, undertakes responsibility to any person, other than the Non-associated Shareholders and PBD, in respect of this report, including any errors or omissions however caused.

Basis of evaluation

We have evaluated the Proposed Acquisitions having regard to the Listing Rules and Australian Securities and Investments Commission (ASIC) Regulatory Guides.

Member of Deloitte Touche Tohmatsu Limited

In order to assess whether the Proposed Acquisitions are fair and reasonable we have:

assessed whether the Proposed Acquisitions are fair by comparing the consideration being offered by PBD under the Proposed Acquisitions with the fair market value of the Interests. The transaction is fair if the value of the Interests is equal to or greater than the value of the consideration offered by PBD
assessed the reasonableness of the Proposed Acquisitions by considering other advantages and disadvantages of the Proposed Acquisitions to Non-associated Shareholders.

Definition of value

Our valuation analysis is based on the concept of fair market value, which we have defined as the amount at which the Interests would be expected to change hands between a knowledgeable willing buyer and a knowledgeable willing seller, neither of whom is under any compulsion to buy or sell. Special purchasers may be willing to pay higher prices to reduce or eliminate competition, to ensure a source of material supply or sales, or to achieve cost savings or other synergies arising on business combinations, which could only be enjoyed by the special purchaser. Our valuations have not been premised on the existence of a special purchaser.

Summary and conclusion

In our opinion the Proposed Acquisitions are fair and reasonable. In arriving at this opinion, we have had regard to the following factors:

The Proposed Acquisitions are fair

According to ASIC Regulatory Guide 111, in order to assess whether the transaction is fair, the independent expert is required to compare the value of the financial benefit being offered to the related party to the value of the consideration being provided to the related party under the Proposed Acquisition. The transaction is fair if the value of the Interests is equal to or greater than the value of the consideration offered by PBD.

As the Interests to be acquired under the Proposed Acquisitions are separate contractual agreements, we have separately considered the fairness of each proposed acquisition.

Set out in the table below is a comparison of our assessment of the fair market value of the Yang Land with the consideration offered by PBD.

Table 1: Evaluation of fairness – the Yang Land

$ million	Section	Low	High
Estimated fair market value of the Yang Land	7.9	17.5	18.5
Total consideration offered for the Yang Land	9.1	17.2	17.2

Source: Deloitte Corporate Finance

The consideration offered by PBD for the Yang Land is below the range of our estimate of the fair market value of the Yang Land. Accordingly it is our opinion that the proposed acquisition of the Yang Land is fair.

Set out in the table below is a comparison of our assessment of the fair market value of The Milton with the consideration offered by PBD.

Table 2: Evaluation of fairness – The Milton

$ million		Section	Low	High
Estimated fair market value of The Milton	1	8.9	21.5	23.5
Total consideration offered for The Milton		9.2	22.3	22.3
Source: Deloitte Corporate Finance
Note:
1. Based on a 50% economic interest in The Milton

Deloitte : PBD Developments Limited – Independent expert’s report and Financial Services Guide

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The consideration offered by PBD for The Milton is within the range of our estimate of the fair market value of The Milton. Accordingly it is our opinion that the proposed acquisition of The Milton is fair.

Valuation of the Interests

We have estimated the fair market value of the Interests as follows:

The Yang Land

We have estimated the fair market value of the Yang Land by applying the residual cash flow approach which estimates the value the Yang Land by working back from the assessed gross realisation of the project (i.e. sales proceeds of the sale of the end lots) to establish the residual value of the property after the costs associated with the project (including development costs and financing costs and an appropriate development profit) have been deducted. The development profit is based on industry benchmarks and takes into account the various risks associated with the project including market and construction risk.

The gross realisation of the residential lots on an individual sale basis has been assessed by the direct comparison approach, whereby sales of similar product are directly compared to the subject to establish a present day fair market value.

Our valuation using the residual cash flow approach has been cross-checked using the direct comparison approach. The direct comparison approach in this instance involves applying a value rate to the selected unit of comparison, which in this case is a rate per hectare of site area and rate per proposed lot, with the adopted value rate derived from the analysis of comparable sales evidence.

The Milton

We have estimated the fair market value of The Milton by also applying the residual cash flow approach.

The gross realisation estimate of the residential units ‘as if complete’ left to sell has been assessed using the direct comparison approach. For units that are pre-sold, the contracted settlement proceeds are assumed in our gross realisation estimate calculation.

The gross realisation estimate of the retail and commercial units has been assessed by capitalisation approach and crosschecked against the direct comparison approach. The capitalisation approach has been effected by applying a marketderived capitalisation rate to the assessed net annual market rent to establish the property’s core investment value (fully leased at current market rents) and then making ‘below the line’ adjustments for the property’s individual investment characteristics, including rental reversions, outstanding abatements, future incentives, et cetera. The direct comparison approach has been applied as a cross check.

The realisation estimate for the management rights has been assessed by direct comparison approach on a rate per total number of units and a rate per unit in the letting pool.

Valuation of the consideration

We have estimated the value of the consideration offered for the Yang Land to be $17.2 million. As the majority of the consideration for the Yang Land is payable based on future sales over an 18 month period, we have discounted the consideration assuming that the Yang Land lots will be realised evenly over this period.

We have estimated the fair market value of the consideration offered for the Milton to be $22.3 million. As the final payment for The Milton is due six months after the execution of the development agreement, we do not consider the time value of money to be material and accordingly have not discounted the consideration for The Milton.

The Proposed Acquisitions are reasonable

In accordance with ASIC Regulatory Guide 111 an offer is reasonable if it is fair. On this basis, in our opinion the Proposed Acquisitions are reasonable. We have also considered the following factors in assessing the reasonableness of the Proposed Acquisition:

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Advantages of the Proposed Acquisition

The likely advantages to Non-associated Shareholders if the Proposed Acquisitions are approved include:

PBD may be able to achieve benefits above the market value of the Interests

Whilst our valuation of the Interests is premised on a market value basis, in arriving at various assumptions with respect to realisation values, we have considered observable historical market data for comparable property sales over, principally, the last three years. During this period we note that property prices have generally been mixed across the major capital cities.

Following a reduction of 225 basis points in the Reserve Bank of Australia’s cash rate to 2.5% since October 2011 and a general improvement in economic sentiment, it is anticipated that property prices are likely to achieve improved growth over the coming year. Furthermore, PBD’s strong connections with international buyers and a weakening in the Australian dollar could drive increased activity from foreigner buyers.

Accordingly, to the extent that PBD can benefit from improved property price growth and realise higher sales prices for the lots units and the units at the Yang Land and The Milton, respectively, additional value may flow to shareholders of PBD.

Aveo Group will remain actively involved in The Milton and in the Point Cook area

Aveo Group is a well-known property developer with significant experience in commercial and residential property developments in Australia and, in particular, has considerable knowledge of The Milton and the Yang Land developments. As Aveo Group will retain a 50% interest in The Milton, PBD will be able to bring to bear, and benefit from, Aveo Group’s considerable property expertise in the development of The Milton.

Although PBD is acquiring 100% of the Yang Land from Aveo Group, Aveo Group still has considerable land holdings in the Point Cook area. Given the strong relationship between PBD and Aveo Group, it is anticipated that PBD will continue to benefit from Aveo Group’s expertise in developments in the Point Cook area.

Change in cash flow profile through the acquisition of the Interests

Prior to PBD’s recently announced diversification strategy, PBD focused principally on acquiring vacant land, principally in Western Australia, for the purpose of undertaking residential developments. Due to the long lead times in acquiring the necessary State and Commonwealth Government permits, planning consents and other statutory approvals to commence construction, considerable cash outflows are required until sales can ultimately be realised.

The Proposed Acquisitions of The Milton and the Yang Land, which are both at an advanced stage of the development process, will allow PBD to realise cash inflows over the shorter term and therefore also enable it to fund other projects.

Disadvantages of the Proposed Acquisition

The likely disadvantages to Non-associated Shareholders if the Proposed Acquisitions are approved include:

PBD may not be in a position to acquire other assets

In the event that PBD is unable to raise additional capital or secure alternative financing arrangements, it may be difficult for PBD to acquire additional assets, in the event that the Proposed Acquisitions are approved, until such time that PBD’s existing assets are realised.

Conclusion on reasonableness

On balance, in our opinion, the advantages of the Proposed Acquisitions outweigh the disadvantages.

Opinion

In our opinion, the Proposed Acquisitions are fair and reasonable to Non-associated Shareholders. An individual’s decision in relation to the Proposed Acquisitions may be influenced by his or her particular circumstances. If in doubt the individual should consult an independent adviser, who should have regard to their individual circumstances.

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This opinion should be read in conjunction with our detailed report which sets out our scope and findings.

Yours sincerely

DELOITTE CORPORATE FINANCE PTY LIMITED

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Tapan Parekh Director

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Robin Polson Director

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1	Overview of the Proposed Acquisitions ............................................................................................................. 9
	1.1 Summary............................................................................................................................................................ 9
	1.2 PBD’s intentions ................................................................................................................................................ 9
	1.3 Key conditions ................................................................................................................................................... 9
2	Scope of the report ........................................................................................................................................... 10
	2.1 Purpose of the report ........................................................................................................................................ 10
	2.2 Basis of evaluation ........................................................................................................................................... 10
	2.3 Limitations and reliance on information ............................................................................................................ 11
3	Profile of PBD ................................................................................................................................................... 13
	3.1 Overview of PBD ............................................................................................................................................. 13
	3.2 Current status of major projects ........................................................................................................................ 13
	3.3 Capital structure and shareholders ..................................................................................................................... 15
	3.4 Share price performance ................................................................................................................................... 16
	3.5 Financial performance ...................................................................................................................................... 17
	3.6 Financial position ............................................................................................................................................. 18
4	Market overview and recent sales activity ....................................................................................................... 19
	4.1 Victorian residential housing market overview .................................................................................................. 19
	4.2 Brisbane residential unit market overview ......................................................................................................... 22
5	Overview of the Yang Land ............................................................................................................................. 25
	5.1 Introduction...................................................................................................................................................... 25
	5.2 Land particulars................................................................................................................................................ 25
	5.3 Project description ............................................................................................................................................ 30
	5.4 Project delivery deed ........................................................................................................................................ 32
	5.5 SWOT analysis ................................................................................................................................................ 33

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6	Overview of the Milton ..................................................................................................................................... 34
	6.1 Introduction...................................................................................................................................................... 34
	6.2 Land particulars................................................................................................................................................ 34
	6.3 Project description ............................................................................................................................................ 41
	6.4 Project agreements ........................................................................................................................................... 44
	6.5 SWOT analysis ................................................................................................................................................ 45
7	Valuation of the Yang Land ............................................................................................................................. 47
	7.1 Valuation methodology .................................................................................................................................... 47
	7.2 Gross realisation estimate ................................................................................................................................. 47
	7.3 Sales rate .......................................................................................................................................................... 49
	7.4 Development timing ......................................................................................................................................... 49
	7.5 Development and selling cost summary ............................................................................................................ 50
	7.6 GST ................................................................................................................................................................. 50
	7.7 Residual cash flow summary ............................................................................................................................ 51
	7.8 Requisite returns .............................................................................................................................................. 51
	7.9 Summary of our valuation of the Yang Land ..................................................................................................... 52
	7.10 Cross check - direct comparison approach ....................................................................................................... 53
8	Valuation of The Milton ................................................................................................................................... 54
	8.1 Valuation methodology .................................................................................................................................... 54
	8.2 Gross realisation estimate ................................................................................................................................. 54
	8.3 Sales rate .......................................................................................................................................................... 57
	8.4 Development timing ......................................................................................................................................... 57
	8.5 Development and selling cost summary ............................................................................................................ 58
	8.6 GST ................................................................................................................................................................. 58
	8.7 Residual cash flow summary ............................................................................................................................ 59
	8.8 Requisite returns .............................................................................................................................................. 59
	8.9 Summary of our valuation of The Milton .......................................................................................................... 60
9	Valuation of the consideration ......................................................................................................................... 61
	9.1 The Yang Land ................................................................................................................................................ 61
	9.2 The Milton ....................................................................................................................................................... 61

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Appendix A: Glossary .............................................................................................................................................. 63 Appendix B: Current status of the Yang Land ....................................................................................................... 64 Appendix C: Current status of The Milton ............................................................................................................. 65 Appendix D: Layout of residential units and commercial space ............................................................................. 66 Appendix E: Benchmark evidence for gross realisation estimates for the Yang Land........................................... 68 Appendix F: Comparable sales to the Yang Land................................................................................................... 72 Appendix G: Benchmark evidence for gross realisation estimates for The Milton – Residential component ....... 73 Appendix H: Benchmark evidence for gross realisation estimates for The Milton – Retail component ................ 79 Appendix I: Benchmark evidence for gross realisation estimates for The Milton – Commercial component ....... 81 Appendix J: Benchmark evidence for gross realisation estimates for The Milton – Management rights component ................................................................................................................................................................ 83 Appendix K: Sources of information ....................................................................................................................... 86 Appendix L: Qualifications, declarations and consents .......................................................................................... 87

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1 Overview of the Proposed Acquisitions

1.1 Summary

On 15 October 2013, PBD announced that, subject to shareholder approval, it intends to acquire the Interests from Aveo Group. The consideration PBD has offered to Aveo Group for the Interests are set out as follows.

1.1.1 The Yang Land

Under the terms of the project delivery deed, PBD will pay a participation fee to Aveo Group of $18.0 million determined as follows.

$100,000 on the date that the project delivery deed was executed on 3 December 2013
$1,700,000 within five business days of the conditions of the project delivery deed being satisfied. These conditions include, amongst others, obtaining approval from financiers, the Commonwealth Government and all necessary permits, consents and approvals from the relevant authorities. This is to be completed within 130 days from the execution of the project delivery deed
$1,700,000 within five business days of the date on which the plan of subdivision for Stage 1 is registered at Land Victoria
for each sale contract, $14,500,000 divided by the number of lots per sale contract, to a maximum of 242 lots
any outstanding amount is to be settled 18 months after the execution of the project delivery deed.

The project delivery deed also grants to Aveo Group an option to sell to PBD any unsold parcels of land at the end of the 18 month period. The purchase price will be any outstanding amount owing to Aveo Group under the payment terms described above.

1.1.2 The Milton

Under the terms of the development agreement, PBD will pay a participation fee to Aveo Group of $22.3 million determined as follows.

$100,000 on the date that the development agreement was executed on 6 January 2014
$22,200,000 on or before 15 June 2014, subject to Aveo Group complying with its obligations under the development agreement.

We note that in addition to the participation fee payable to Aveo Group, from 31 October 2013, PBD is required to contribute its 50% share of construction costs incurred at The Milton.

1.2 PBD’s intentions

If the Proposed Acquisitions are successful:

PBD will hold an economic interest in the Yang Land with the intention of allowing PBD to develop the property into a residential estate and realising its investment through future lot sales
PBD will hold a 50% development interest in The Milton with the intention of allowing PBD to complete the development and realising its investment through future unit sales.

The Proposed Acquisition is to be funded by PBD through a combination of cash following the recent capital raising and existing loan facilities.

1.3 Key conditions

The Proposed Acquisitions require approval by the Non-associated Shareholders. We understand from management that PBD has already obtained Foreign Investment Review Board approval for the Proposed Acquisitions. Further details of the key conditions of the Proposed Acquisitions are included in the Notice of Meeting.

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2 Scope of the report

2.1 Purpose of the report

The Proposed Acquisitions involve the acquisition of assets from Aveo Group.

Aveo Group held a relevant interest in more than 10% of the total votes attached to PBD’s securities until 9 August 2013 and is deemed to have maintained this interest for the purposes of ASX Listing Rule 10.1 until 9 February 2014 (which includes the period during which PBD agreed to enter into the project delivery deed for the Yang Land and the development agreement for The Milton).

In accordance with ASX Listing Rule 10.10, the Directors have requested that Deloitte Corporate Finance provide an independent expert’s report advising whether, in our opinion, the Proposed Acquisitions are fair and reasonable.

This report is to be included in the Notice of the Meeting to approve the Proposed Acquisitions, which will be sent to PBD’s non-associated Shareholders, and has been prepared for the exclusive purpose of assisting Non-associated Shareholders in their consideration of the Proposed Acquisition. Neither Deloitte Corporate Finance, Deloitte Touche Tohmatsu, nor any member or employee thereof, undertakes responsibility to any person, other than the Non-associated Shareholders and PBD, in respect of this report, including any errors or omissions however caused.

2.2 Basis of evaluation

2.2.1 Guidance

In our assessment as to whether the Proposed Acquisitions are fair and reasonable, we have had regard to common market practice and Regulatory Guide 111 issued by ASIC in relation to the content of expert’s reports.

ASIC Regulatory Guides

There are a number of ASIC Regulatory Guides that provide guidance on independent expert’s reports and the basis of preparation of independent expert’s reports:

ASIC Regulatory Guide 76: Related Party Transaction (RG 76)
ASIC Regulatory Guide 111: Content of Expert Reports (RG 111)
ASIC Regulatory Guide 112: Independence of Experts (RG 112).

RG 112 primarily focusses on the independence of experts and provides little guidance on evaluating transactions. RG 76 defers to RG 111.

RG 111 provides guidance in relation to the content of independent expert’s reports prepared for a range of transactions. RG 111 notes that an expert should focus on the substance of the related party transaction, rather than the legal mechanism.

RG 111 also notes that a related party transaction is:

fair, when the value of the financial benefit being offered by the entity to the related party is equal to or less than the value of the benefit being received. In valuing the financial benefit given and the consideration received by the entity, an expert should take into account all material terms of the proposed transaction
reasonable, if it is fair, or, despite not being fair, after considering other significant factors, shareholders should vote in favour of the transaction.

We have considered the fairness of the Proposed Acquisitions by comparing the consideration being offered by PBD under the Proposed Acquisitions with the fair market value of the Interests. The transaction is fair if the value of the Interests is equal to or greater than the value of the consideration offered by PBD.

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Fair market value has been defined as the amount at which the Interests would be expected to change hands between a knowledgeable willing buyer and a knowledgeable willing seller, neither of whom is under a compulsion to buy or sell. Special purchasers may be willing to pay higher prices to reduce or eliminate competition, to ensure a source of material supply or sales, or to achieve cost savings or other synergies arising on business combinations, which could only be enjoyed by the special purchaser. Our consideration of the fair market value of the Interests has not been premised on the existence of a special purchaser.

To assess the reasonableness of the Proposed Acquisitions we considered the following significant factors in addition to determining whether the Proposed Acquisitions are fair:

additional benefits that PBD may be able to realise through the acquisition of the Interests
the opportunity costs of the Proposed Acquisitions
other implications associated with PBD Shareholders not voting in favour of the Proposed Acquisition.

2.2.2 Individual circumstances

We have evaluated the Proposed Acquisitions for Non-associated Shareholders as a whole and have not considered the effect of the Proposed Acquisitions on the particular circumstances of individual investors. Due to their particular circumstances, individual investors may place a different emphasis on various aspects of the Proposed Acquisitions from the one adopted in this report. Accordingly, individuals may reach different conclusions to ours on whether the Proposed Acquisitions are fair and reasonable to Non-associated Shareholders. If in doubt investors should consult an independent adviser, who should have regard to their individual circumstances.

2.3 Limitations and reliance on information

This report should be read in conjunction with Appendix L.

In addition, we highlight below some specific limitations related to the valuation of the Interests.

2.3.1 General limitations

For the purposes of our assessment and based on our discussions with management and our own review (although we note that we are not lawyers) we have assumed no stamp duty will be payable with respect to the acquisition of the Interests.

2.3.2 The Yang Land

Date of inspection

The date of our inspection of the asset was 11 December 2013. However, management of PBD and Aveo Group have confirmed that there have been no changes since this date and the date of our report to cause the value of the Interest to change materially.

Verifiable and/or key assumptions

The verifiable and/or key assumptions upon which our valuation of the Yang Land is based are as follows:

development approvals to facilitate the development as proposed have been obtained and that all development costs are typical and no extraordinary costs for infrastructure or externals works requirements are required.

2.3.3 The Milton

Date of inspection

The date of our inspection of the asset was 15 January 2014. However, management of PBD and Aveo Group have confirmed that there have been no changes since this date and the date of our report to cause the value of the Interest to change materially.

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Verifiable and/or key assumptions

The verifiable and/or key assumptions upon which our valuation of The Milton is based are as follows:

there is a discrepancy between the approved plans and current pricing/ sales matrix. We have been advised by the developer this is due to a number of unit types being recently reconfigured, with the architectural plans to be amended based on the pricing/sales matrix. This valuation is based on the critical condition that any variances on the approved plans are amended and approved in accordance with the current sales/ pricing matrix
all required approvals have been obtained to facilitate the development as proposed
the Community Management Statement will be registered in accordance with the proposed development scheme and plans as detailed herein
the development is completed in accordance with the plans and details provided. On completion, the property will fully comply with all statutory building regulations, the Building Code of Australia, Council’s / Ministers conditions of consent, and each unit will have individual title
all unconditional pre-sales contracted to date are settled on completion of the development at the sale prices currently transacted
there are no material variations to the lump sum construction contract with Hutchinson Builders
70% of the units or greater are placed in letting pool for the purposes of the consideration payable under the Management Rights contract
all major consultants costs (i.e. architects, engineers etc.) have been paid for in the work in progress to date, or where novated as a cost as part of the Hutchinson construction contract
we have adopted the charges as per the budget and in accordance with the approval. We note based on recent Brisbane City Council policy changes these charges may change

adopted auto tax rule and assumed one eleventh of the residential unit gross realisation is to be remitted in GST to the Australian Taxation Office.

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3 Profile of PBD

3.1 Overview of PBD

PBD is a listed Australian property development company focused on Australia’s eastern seaboard. PBD was previously known as Port Bouvard Limited and its major projects included a number of developments in the ‘Port Bouvard Residential Estate’ area, located 75 kilometres (km) south of Perth, Western Australia.

The Oceanique development (discussed in 3.2) now represents the Company’s only link to the Port Bouvard Residential Estate. The Company subsequently diversified into other property development projects, including Point Grey, which was acquired in 2007 and is also in the Western Australian market.

In 2010, Aveo Group, an ASX listed property group, acquired an interest of approximately 29.5% in PBD. Subsequently, in June 2013, as a result of a decision by Aveo Group to refocus its business activities, Aveo Group sold a 19.9% interest in PBD to Mulpha International Bhd (Mulpha Group). The remaining interest held by Aveo Group was sold on-market. Mulpha Group is a Malaysia based diversified conglomerate which has a substantial portfolio of property development and investment assets of approximately $1.3 billion[1] located throughout the Asia Pacific region, and in particular in Australia.

Over the last four years, PBD has experienced financial difficulties as a result of a slowdown in sales activity and the decline in residential property prices in Western Australia. Combined with high levels of leverage, this slowdown has resulted in the Company not being able to meet all of its debt obligations and the Company having difficulty refinancing its debt facilities.

In early 2013, the Company completed a rights issue undertaken as part of a refinancing of the facilities with St George that involved the utilisation of the proceeds from the rights issue to repay part of the financing provided by St George along with agreeing to a staged pay down of the balance of the St George financing over the next three years.

The problems experienced by the Company are not dissimilar to those experienced by other property developers in the Australian, and in particular Western Australian, market. Because this has been a market wide issue and also because of the impact of the global financial crisis and ongoing weaker financial markets on capital flows, traditional lenders, such as banks, have shown a reluctance to continue to fund companies such as PBD and, on an overall basis, reduced their exposure to the property development sector.

In the last nine months, the Company has expanded into the east coast of Australia through the acquisition of interests in two property development projects in Sydney, New South Wales. These investments were aligned with PBD’s revised strategic direction announced at the General Meeting of shareholders on 24 June 2013 which was to diversify PBD’s asset base with projects on the east coast of Australia, within inner metropolitan and city locations and close to established infrastructure. The investments have been funded through share placements and bank debt.

In late 2013, the Company also refinanced the majority of its facilities with St George to Sun Hung Kai International Bank [Brunei] Limited (SHK).

On 15 October 2013, PBD announced its intention to acquire interests in The Milton and the Yang Land located on the east coast.

3.2 Current status of major projects

A summary of each of the projects owned by the Company is set out below (the Yang Land and Milton assets are separately profiled in Section 5 and Section 6, respectively).

3.2.1 Point Grey

Point Grey is a 275 hectare property surrounded by the Peel and Harvey Estuaries located 75 km south of Perth and 12 km south east of Mandurah, Western Australia. PBD acquired Point Grey in 2007 with the intention to develop the land into a residential village with over 3,000 residential lots (incorporating a marina) over a 20 year period. Point Grey had a carrying value of $48.0 million as at 30 June 2013.

1 The Mulpha Groups 2012 annual report

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To date, PBD has obtained the following approvals.

Table 3: Planning and environmental approval

Date	Details
Planning
April 2009	Urban zone approval received
June 2011	Outline Development Plan/Town Planning Scheme approval
September 2011	Western Australian Planning Commission subdivision approval for the first 341 lots
Environmental
March 2011	Revised Environmental Protection Authority approval received (for up to 3,080 dwellings)
December 2011	Environmental Protection Authority recommendation to State Minister for Marina proposal
April 2012	Commonwealth terrestrial environmental residential approval received
August 2012	State Minister Marina approval received

Source: PBD

Finalisation of a marina environmental assessment from the Commonwealth Government is ongoing. PBD management has advised that development of Point Grey is on hold for the next twelve months.

3.2.2 Oceanique

The Oceanique luxury apartments project comprises 66 luxury apartments across two eight story towers located at Port Bouvard, Western Australia. Construction of Oceanique was completed in June 2010. As at 17 January 2014, 20 apartments with a carrying value of $25.0 million remained unsettled. PBD management advised that the remaining apartments are expected to be settled in FY14. PBD obtained an independent valuation for mortgage purposes from m3property (WA) Pty Limited, dated 26 August 2013, which valued 17 unsettled apartments at Oceanique at approximately $23.0 million.

3.2.3 Bridgeview

Bridgeview is a proposed townhouse project located in Annandale, approximately 5 km from the Sydney central business district (CBD). The proposed development is comprised of 23 townhouses which are due to be completed in mid-2015. All of the townhouse units have been pre-sold.

PBD invested $9.0 million into a joint venture in April 2013 with BHW Group Pty Limited and Dundas Developments Pty Limited to develop Bridgeview. The investment in the joint venture was funded by a $7.5 million share placement and $1.5 million from working capital reserves. PBD management expect the project to have an end value of approximately $30 million. Under the terms of the joint venture agreement, on completion of the development, which is expected to occur in September 2014, PBD will receive its investment amount and half of any net profit remaining in the joint venture.

3.2.4 Burwood Square

Burwood Square is a proposed apartment project located in Burwood, approximately 12 km from the Sydney CBD. The proposed development will comprise 210 residential units across three towers, 8,200m[2] of retail space and public and private basement car-parking.

PBD management has advised that all of the residential units have been sold off the plan in recent months. Construction commenced in November 2013 and is expected to take between two and three years to complete.

PBD invested $12.4 million into a joint venture with the owners and developer of the land, B1 Goldfield Development Pty Limited, in September 2013, funded by new bank borrowings of $12.4 million. PBD is required to contribute a further $13.5 million in the financial year ending 30 June 2014. Under the terms of the joint venture agreement, on completion of the development (expected in 2016) PBD will receive its investment amount (including interest) and its 48% share in any net profit remaining in the joint venture.

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3.2.5 Other assets

PBD also holds an interest in Lot 370 Country Club Drive, Port Bouvard which is viewed as non-core asset to PBD and is in the process of being sold. The carrying value of Lot 370 Country Club Drive was approximately $2.9 million as at 30 June 2013.

On 17 January 2014, PBD announced the sale of Bandy Creek, Esperance for $1.6 million.

3.3 Capital structure and shareholders

As at the date of this report PBD had 6.5 billion ordinary shares on issue.

PBD’s top five shareholders are listed in the table below.

Table 4: PBD’s registered shareholders as at 31 January 2014

		Number of shares	Percentage of
Shareholder		held	shares held
Sun Hung Kai Investments Services Limited (nominees)		2,857,488,046	44.0%
Citicorp Nominees Pty Limited	1	2,202,519,073	33.9%
National Nominees Limited		141,325,733	2.2%
Yue Wang		100,000,000	1.5%
Liang Zhen Lin		87,560,168	1.3%
Total top five shareholders		5,388,893,020	83.0%
Remaining shareholders		1,106,639,411	17.0%
Total		6,495,532,431	100.0%

Source: Computershare

Note: 1. Includes the Mulpha Group’s 19.9% interest.

PBD has a tightly held shareholder base with the five largest registered shareholders holding a combined effective interest of 83% of PBD’s shares on issue. The largest single shareholder with a 44.0% interest in the Company is SHK Services (though we understand these are nominee accounts where SHK Services holds the shares in PBD on behalf of third party clients of SHK either as a custodian or in connection with SHK & Co’s margin lending business). Subsequent to the capital raising announced on 17 October 2013 (refer below), PBD also has options on issue over unissued ordinary shares.

On 20 December 2012, PBD announced a four for one pro-rata renounceable entitlement offer to eligible shareholders at an offer price of $0.01 per share, representing a 23.1% discount to the closing price of $0.013 on 17 December 2012. The fully underwritten offer raised approximately $23.8 million (before costs), the net proceeds of which were intended to be used for the following purposes:

strengthen the balance sheet by $12.0 million
payment of an instalment of $1.5 million to an unsecured creditor
payment of entitlement offer costs
provide working capital of approximately $8.0 million.

The capital raising resulted in an additional 2.38 billion shares being issued. Approximately 58% of total entitlements were subscribed for, with the shortfall taken up by the underwriter, Bell Potter Securities Limited and its subunderwriters.

On 15 April 2013, PBD announced it had completed a private placement of shares raising approximately $7.5 million at $0.01 per share, which was utilised to acquire an interest in the Bridgeview development. The capital raising resulted in an additional 742 million shares being issued.

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On 17 October 2013, PBD announced that it proposes to raise up to $41.8 million via a three for four pro-rata nonrenounceable entitlement issue at an offer price of $0.015 per share, representing a 37.5% discount to the closing price of $0.024 on 16 October 2013. In addition, subscribers to the entitlement offer will receive one free option for every one new share subscribed for. The options are exercisable at $0.0225 on or before 31 December 2015. The net proceeds of the entitlement offer are intended to be used to reduce PBD’s existing debt facilities and to fund new property development projects as part of the Company’s future growth strategy.

3.4 Share price performance

The price and trading volumes of PBD shares are presented graphically in the figure below.

Figure 1: PBD’s share price activity on the ASX

==> picture [466 x 304] intentionally omitted <==

==> picture [112 x 39] intentionally omitted <==

----- Start of picture text -----

Source: PBD, ASX announcements
Notes:
1. RHS – right hand side
2. LHS – left hand side
----- End of picture text -----

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The major events and factors shown in the figure above are set out as follows:

Table 5: Factors affecting trading in PBD shares

Notes	Date	Comments
1	1 March 2012	PBD announced its half year results reporting a statutory loss of $15.7 million (after impairing the
		Oceanique development by $19.2 million), and a delay to the commencement of the Point Grey
		development
2	2 July 2012	PBD announced the appointment of an interim Chief Executive Officer, Darryl Guihot
3	28 August 2012	PBD announced that it expected an impairment of inventory of between $55.0 million to
		$60.0 million, for the year ending 30 June 2012, primarily related to the Point Grey development
4	20 December 2012	PBD announced a fully underwritten four for one pro-rata renounceable entitlement offer at a
		price of $0.01 per ordinary share (23.1% discount to previous day trading) to raise approximately
		$23.8 million
5	15 April 2013	PBD announced the investment in the Bridgeview townhouse development funded by a private
		placement of 742 million ordinary shares raising approximately $7.5 million
6	5 July 2013	PBD released a market update noting that the Company had settled over $8 million in sales at its
		Oceanique apartment development
7	2 September 2013	PBD released its preliminary final report for the year ending 30 June 2013
8	15 October 2013	PBD announced the Proposed Acquisitions of the Yang Land property and a 50% interest in The
		Milton residential development project
9	17 October 2013	PBD announced a three for four pro-rata non-renounceable entitlement offer at a price of $0.015
		per ordinary share (37.5% discount to previous day closing price) to raise approximately
		$41.8 million
10	24 October 2013	PBD announced that they had entered into a joint venture with the owners of Burwood Square.
		The announcement noted that PBD had invested $8.5 million in the venture to date and that the
		company intends to invest a total $17.5 million over the life of the project
11	26 November 2013	PBD announced that there was a shortfall in the number of rights subscribed to under the
		entitlements offer of 216 million shares
12	17 January 2014	PBD announced that it had sold Bandy Creek, Esperance for $1.6 million. PBD also announced
		that they had received $1.6 million in sales revenue from the Oceanique apartments adding that
		the 20 apartments remaining at Oceanique have a realisable value of approximately $25 million

Source: PBD, ASX announcements

Elevated trading volumes noted after the four for one entitlement offer primarily reflects the increased number of shares on issue and portfolio adjustments undertaken by institutional investors, including SHK. Prior to the entitlement offer, trading in PBD shares was relatively illiquid.

3.5 Financial performance

Given the nature of PBD’s business operations and the substantial change in the business operations over the last two to three years, we do not consider a review of the historical financial performance of the Company (other than that discussed above) relevant for the purposes of our evaluation of the Proposed Acquisitions.

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Page 17

3.6 Financial position

The audited balance sheet of PBD as at 30 June 2012 and 30 June 2013 are summarised in the table below.

Table 6: Financial position

	June 2012	June 2013
$’000 (unless otherwise stated)	Audited	Audited
Cash	651	-
Receivables	809	239
Inventories	9,868	21,480
Other	274	160
Non-current assets classified as held-for-sale	4,233	2,948
Total current assets	15,835	24,827
Receivable from joint arrangement	-	9,000
Inventories	65,377	48,000
Property, plant and equipment	2,851	3,025
Total non-current assets	68,228	60,025
Payables	687	897
Interest bearing liabilities	43,561	2,114
Provisions	151	86
Total current liabilities	44,399	3,097
Other payables	4,274	-
Interest bearing liabilities	-	20,757
Provisions	67	92
Total non-current liabilities	4,341	20,849
Net assets	35,323	60,905
Debt as a percentage of total assets (%)	51%	27%

Source: PBD 2012 and 2013 Annual Report, Deloitte Corporate Finance

We note the following in relation to PBD’s financial position:

current and non-current inventories as at 30 June 2013 comprised finished apartments (Oceanique) of $21.5 million and land under development (Point Grey) of $48.0 million. In FY 2012, inventories were impaired by $78.2 million based on updated information on lot yield, likely selling prices and infrastructure and lot costs
non-current assets held-for-sale comprised Lot 370 Country Club Drive, Port Bouvard and land located at Bandy Creek, Esperance
receivable from joint venture of $9.0 million relates to the investment in the Bridgeview joint venture which was funded by way of a loan to the joint venture
property, plant and equipment comprised primarily of assets under construction of $2.9 million as at 30 June 2013
current and non-current interest bearing borrowings as at 30 June 2013 comprised a secured commercial overdraft ($2.1 million) and a secured commercial loan ($20.8 million) secured by registered first mortgages and debenture charges over land and building owned by PBD.

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4 Market overview and recent sales activity

The assets underlying the Interests have exposure to the Victorian (in the case of the Yang Land) and Brisbane (in the case of The Milton) property markets and therefore, set out in this section is our analysis of those markets.

4.1 Victorian residential housing market overview

Despite recent challenges, there are growing signs that the Victorian economy is improving. Low interest rates are providing support to consumer spending and the housing sector. Additionally, a weaker Australian dollar is also alleviating Victoria’s trade-exposed sectors. After growth of 1.6% in 2012-13, the pace of growth in Victoria is expected to remain below trend in 2013-14, but to pick up in 2014-15 as low interest rates take further effect and provide support to the broader Victorian economy.

Strong population growth, low interest rates and improved affordability should continue to support house prices in Melbourne. After estimated growth of around 7% in 2013, we expect moderate growth in Melbourne house prices in 2014. The upswing in house prices should keep residential construction activity at an elevated level.

Soft conditions in the labour market have resulted in a gradual rise in Victoria’s unemployment rate. An improvement in business confidence and a pickup in economic activity should eventually result in greater hiring activity. However, the modest pace of jobs growth is likely to continue into early next year. Therefore, we are likely to see the unemployment rate edge higher and peak some time mid this year.

The Bank of Melbourne Survey of Business Trends and Prospects indicates that businesses are much more confident about the outlook. Of respondents surveyed in the September quarter, 32% expect the Victorian outlook to strengthen in the coming year, up 15% on the June quarter. Additionally, a lower proportion of respondents are expecting the Victorian economy to weaken down from 34% in the June quarter to 17% in the September quarter.

Housing

Housing markets across Australian capital cities and Melbourne have gained momentum over the past year and house prices are now in a clear upswing. According to RP Data-Rismark, dwelling prices in Melbourne gained 6.6% in the year to November 2013. The annual pace of growth in average house prices over the period from 2012-13 positioned Melbourne as the third best performing among capital cities, behind Sydney and Perth. By comparison, Australia-wide, capital city average dwelling price growth rose 8.0% in the year to November 2013. The Australian Bureau of Statistics measure of house prices also grew by a similar amount for Melbourne. House prices gained 6.8% in the year to the September quarter, the third consecutive quarter of positive annual growth. Investors have been a significant driver of housing demand across Australia and in Victoria.

However, owner occupier demand is also strengthening. Financing for owner-occupier housing in Victoria witnessed double-digit annual growth for four consecutive months to October. Owner occupiers are benefiting from improved housing affordability. According to the HIA-CBA housing affordability report, housing affordability is at its highest in several years in both Victoria and Melbourne.

The exception has been first-home buyers, which as a proportion of all dwellings financed fell 11.7%, a record low in September 2013. The end of the first-home buyers’ grant for established homes in Victoria will be partially offset by a discount in stamp duty for first home buyers for interests valued up to $600,000. A 40% reduction in stamp duty took effect from 1 July 2013 (previously 30%) and 50% in from 1 September 2014. The discounts have been progressively increased since 1 July 2011 and continue to apply to first-home buyers of established homes.

Dwelling investment

Residential dwelling investment (i.e. construction of residential dwellings) in Victoria has softened this year. Dwelling investment has slowed from annual growth of 7.4% in the year to the December quarter 2012 to an annual pace of 0.2% in the year to the September 2013 in Victoria. However, the slowdown in part reflects a return to more sustainable levels of activity. Rising house prices should, however, keep residential construction activity at healthy levels. Building approvals have stabilised at a level above the long-range average, suggesting that relatively high levels of residential building activity should be sustained. Recent changes to first-home buyers’ incentives favouring newly constructed homes may provide some support to residential building over the next year. However, dwelling investment may not provide as large a contribution to growth in Victoria in comparison to other States.

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Outlook

The outlook for the Melbourne property market is positive with the following key factors contributing to this:

consumer confidence increasing
lending rates hitting record lows
established house prices increasing
migration flows exceeding thresholds.

4.1.1 Point Cook market overview

The Point Cook property market generally comprises new and emerging residential subdivisions providing lots between 300 square meters (m[2] ) and 800m[2] . The majority of the current supply is sized between 300m[2] and 500m[2] with a steady volume of sales occurring over the past 12 months. A map of Point Cook is presented below.

Figure 2: Location of Point Cook, Victoria

==> picture [454 x 281] intentionally omitted <==

Source: Google Maps

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We have researched Council records for recorded sales throughout Point Cook with our findings summarised in the figure below.

Figure 3: Point Cook vacant lot sales for January to October 2013

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----- Start of picture text -----

70 $500
60 $450
$400
50
$350
40 $305
$269 $276 $270 $300
30 $235 $239 $245 $248
$215 $250
20 $195
$200
10 $150
47 54 58 45 61 45 57 48 34 35
0 $100
Sale Volume Median Price
Median price ($'000)
Sales volume - number of lots
----- End of picture text -----

Source: PDS Live, Deloitte Corporate Finance

As can be seen from the above figure, the market has been fairly consistent throughout 2013 with the median price growing substantially over the period.

The breakdown of lots sold during 2013 on a size range basis is presented in the figure below.

Figure 4: Point Cook vacant lot sales for January to October 2013 by land size

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----- Start of picture text -----

22%
38%
7%
5%
4%
24%
200m2 - 299m2 300m2 - 399m2 400m2 - 499m2
500m2 - 599m2 600m2 - 699m2 700m2 - 799m2
800m2+
----- End of picture text -----

Source: PDS Live, Deloitte Corporate Finance

The majority of lots sold range between 200m[2] and 400m[2] .

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4.2 Brisbane residential unit market overview

Brisbane’s inner city apartment market remained stable over the fourth quarter of 2013, recording slightly higher volumes of unconditional transactions than the previous quarter. Underlying fundamentals have been supportive of the inner Brisbane apartment market due to the low interest rate environment, firming rents, low vacancy levels and a preference for inner city living amongst a range of other demographics which has led to increased sales demand for inner city apartments.

Notably, apartments made up 95% of all approvals in the third quarter of 2013 for inner Brisbane. Investors have remained the most active participants in the market, however reports from marketing agents have indicated increased levels of enquiries from owner occupiers as more positive sentiment enters the residential sector.

Figure 5: Annual demand and supply of new apartments in inner Brisbane

==> picture [330 x 213] intentionally omitted <==

Source: Colliers International

Developers and marketing agents alike are reporting interstate buyers have identified Brisbane as a desirable investment opportunity as price growth in Sydney and Melbourne has eroded gross yields in these markets. Should the southern capitals, Sydney in particular, sustain current levels of price growth, investors will be further incentivised by the returns currently being offered in the Brisbane market.

Pricing has remained largely unchanged over the past 12 months, with a weighted average sale price of approximately $532,900, falling 4% from the previous quarter, however only reduced 1% from the same corresponding period in 2012. This decline is largely attributable to a higher proportion of one bedroom apartment sales over the quarter. On an annualised basis, the weighted average sale price was approximately $531,100. The type of apartments remaining for sale across existing projects suggest the quarterly weighted average sale price may experience some uplift in coming quarters.

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The current and future likely supply of new apartments in inner Brisbane is presented in the figure below.

Figure 6: Current and likely future supply of new apartments in inner Brisbane

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==> picture [97 x 6] intentionally omitted <==

----- Start of picture text -----

Source: Colliers International
----- End of picture text -----

4.2.1 Inner west precinct

Activity has gained momentum across the inner west precinct, where The Milton is located, as new projects released throughout the 2013 financial year lifted the volume of unconditional sales. It is estimated that approximately 264 apartments remain available for sale in the inner west which includes the subject development. Rolling annual sales to the third quarter of 2013 were approximately 243, more than double the five year average.

There was limited change in the annualised weighted average sale price, recorded at $559,800 in the third quarter of 2013, 6% greater than the inner Brisbane average. A higher proportion of two bedroom apartment sales priced between $550,000 and $650,000 resulted in an increase to the average sale price. With the release of over 560 apartments in 2013, the future development pipeline has somewhat diminished. A summary of the major Brisbane Inner West developments is presented below.

Table 7: Summary of major Brisbane inner west developments

						Sold
			Total	Sold to	Available	September
Development	Suburb	Status	units	date	for sale	2013 quarter	% Sold
The Milton	Milton	Under Construction	303	228	75	-	75%
Savoir Faire	Milton	Awaiting construction	65	55	10	25	85%
Siena Milton	Milton	Under Construction	49	41	8	9	84%
Westmark	Milton	Awaiting construction	243	39	132	39	16%
38 High Street	Toowong	Awaiting construction	136	n.p.	n.p.	n.p.	n.p.
Aspect on Benson	Toowong	Under construction	73	57	16	1	78%
Total			869	420	241	74	68%

Source: Colliers South East Queensland Apartment Report 2013 Notes: No purchases – n.p

1. This has been obtained from research undertaken by Colliers in 2013 and since this date, details within this table relating to timing, units sold and units available for sale are likely to have changed.

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4.2.2 Development sites market overview

The residential development site market within the Brisbane CBD improved over the 2013 financial year, with increased levels of transaction activity. The market is being predominantly operated on a local level, driven by highly experienced developers reacting to market opportunities and the ultimate buyer profile. There has been a growing demand for purchases from interstate investors and some interest from international purchasers, however transactions are limited.

A preference is being shown for small to moderate sized redevelopment sites (i.e. 70 to 100 units) that have strong underlying property fundamentals (location, building design, marketability, etc.) whilst also providing a reasonable degree of holding income in place to cover holding costs prior to re-development. Large, vacant sites with no income are attracting the least interest and the reduced number of willing participants has placed a greater downward pressure on the buyer’s perception of value/price than perhaps other asset classes or property segments.

Large infill sites are affected by a broader price ceiling being approximately $10 million due to the capacity of local groups to obtain funding. The ability to source funds from outside the region or secure syndicated funding is typically required. Larger sites are more vulnerable to limited market participation, low price expectations for unconditional and short term contracts and potentially longer and more intensive marketing campaigns to secure higher values and to conclude an effective sale.

Outside of specific projects that fill an immediate known demand for specific end user requirements, the market for development sites is generally weak. The weight of risk that purchasers are placing on sales/pre-lease timeframes and approvals has increased significantly. This is resulting in longer negotiation periods and purchaser due diligence.

With more positive sentiment evident within the broader residential sector, we anticipate the residential site market will continue to improve over 2014.

Based on the most recent Place Market Report Inner Brisbane Apartments (September quarter of 2013), there is approximately 7.3 months remaining supply of residential apartments in Brisbane.

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5 Overview of the Yang Land

5.1 Introduction

The property, also referred to as the Yang Land, comprises a regular shaped land parcel of approximately 14.34 hectares which forms the balance part of a larger parent parcel that includes a school site (which was sold in 2012), a sports field (to be dedicated to Council) and a child care centre site (also now sold) which are not part of the Yang Land acquisition. The estate is part of the Saltwater Coast development and Aveo Group continues to own the rest of the development and expects to develop it over the coming years.

The property is situated to the northern side of Point Cook Homestead Road in the developing residential suburb of Point Cook, located approximately 20 km’s south west of the Melbourne CBD.

Figure 7: Location of the Yang Land relative to Melbourne CBD

==> picture [456 x 255] intentionally omitted <==

----- Start of picture text -----

Subject
----- End of picture text -----

Source: Saltwater Coast website

Upon completion, the overall Saltwater Coast development master plan area will incorporate approximately 2,500 new homes. The estate will be well supported by approximately 50 hectares of parklands and public open space, two primary schools, a childcare facility, a shopping centre and a lifestyle club incorporating gymnasium, indoor and outdoor swimming pools, tennis courts and cafes.

5.2 Land particulars

5.2.1 Title details

The key title details for the Yang Land are presented in the table below.

Table 8: Key title details for the Yang Land

Interest	Freehold
Description	Volume 11361 in Folio 371 (Parent parcel)
Registered Proprietor	FKP Residential Developments Pty Limited

Source: PBD Note: FKP Residential Developments Pty Limited is a subsidiary of Aveo Group

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We note that the title is subject to a Section 173 Agreement dated 2 July 2007 which refers to the developer’s contributions to be made in accordance with ‘The Policy Framework for Infrastructure Financing in the City of Wyndham’ dated 21 October 1996.

Our valuation is based on the assumption there are no registered covenants or caveats which restrict the clear ownership or transfer of title. We note the following easements/encumbrances listed on title:

Mortgage AH630457F 23/11/2010 – Australia and New Zealand Banking Group Limited
Planning Agreement Pursuant to Section 173 of the Planning and Environment Act 1987 – AF545425L 20/12/2007.

There are no unregistered dealings recorded on the title.

5.2.2 Site and services

The key site and services attributes for the Yang Land are presented in the table below.

Table 9: Key site and services attributes for the Yang Land

Site	The site comprises an irregular shaped allotment configured in 3 parts separated by Saltwater Promenade
Topography	Relatively level
Site area	Approximately 14.34 hectares (excluding the child care centre site and sporting oval)
Site boundaries	Point Cook Homestead Road: 260 metres
	Saltwater Promenade: 260 metres
	Brookdale Road (constructed but not yet subdivided): 206.5 metres
Flood status	The site is situated above known flood levels
	Formal flood searches have not been undertaken
Access	Access to the site is via Point Cook Homestead Road and Saltwater Promenade
Services	All normal services are available within close proximity for connection to the land including reticulated water,
	sewerage, telephone and electricity services

Source: Wyndham City Council, Aveo Group, PBD, Deloitte Corporate Finance analysis

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Figure 8: Map of the Yang Land site

==> picture [268 x 418] intentionally omitted <==

Source: PBD

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5.2.3 Planning

The key planning attributes for the Yang Land are presented in the table below.

Table 10: Key planning attributes for the Yang Land

Local authority	Wyndham City Council
Planning scheme	Wyndham Planning Scheme
Zoning	Residential 1

Local authority		Wyndham City Council
Planning scheme		Wyndham Planning Scheme
Zoning		Residential 1
The purpose of the Residential 1 zone is as follows:  to provide for residential development at a range of densities with a variety of dwellings to meet the housing needs of all households  to encourage residential development that respects the neighbourhood character  in appropriate locations, to allow educational, recreational, religious, community and a limited range of other non-residential uses to serve local community needs. Figure 9: Map of Point Cook residential zoning Source: Wyndham City Council Note: The above highlighted area in the town plan does not correlate with the land which is the subject of this valuation. Constraints Development plan overlay The purpose of the development plan overlay is as follows:  to identify areas which require the form and conditions of future use and development to be shown on a development plan before a permit can be granted to use or develop the land  to exempt an application from notice and review if it is generally in accordance with a development plan.

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	This overlay is not considered to have any negative impact on the proposed development
Development approvals	There is a current development approval in place for a residential subdivision which does not currently
/ applications	match what is proposed on the site. The date of the original approval is 25/02/2009. Since this date there have been five amendments to the subdivision layout and number of lots. Currently the number of lots and lot sizes vary between the latest amendment to the approval, which is for 262 lots and is currently
	proposed on the site as per information provided by PBD. There is a concept plan to develop 275
	residential housing lots

Source: Wyndham City Council, Aveo Group, PBD, Deloitte Corporate Finance analysis

5.2.4 Environmental considerations

The key environmental considerations associated with the Yang Land are presented in the table below.

Table 11: Key environmental considerations - the Yang Land

==> picture [494 x 32] intentionally omitted <==

Current use	Residential subdivision
Previous use	The site has been vacant for a number of years and has been previously used for agricultural purposes Given the property has been utilised for agricultural purposes; the possibility of contamination having previously occurred exists. We are, however, unable to comment on past practices, in particular to the possible use of chemicals associated with the rural uses

Existing issues raising concern	None
Environmental reports	A search of the Victorian Environmental Protection Act 1970 priority sites register indicates the site is not listed as a priority site nor is it in the vicinity of a site listed on the Priority sites register

Asbestos	None noted

Source: Wyndham City Council, Aveo Group, PBD, Deloitte Corporate Finance analysis

5.2.5 Locality and surrounding development

The Yang Land’s locality and surrounding development is as follows:

the property is located approximately 20 km’s south west of the Melbourne CBD
the property is situated to the northern side of Point Cook Homestead Road with a frontage of approximately 260 metres and is bisected by Saltwater Promenade, creating a southern portion with a frontage to Saltwater Promenade of 260 metres and a northern portion with a frontage to Saltwater Promenade represented by the constructed (but not yet separately surveyed or titled) Brookdale Road
the surrounding area is predominantly developed by the Saltwater Coast residential development situated on the fringe of a developing residential area which has seen substantial residential development over the past 4 to 5 years
the subject property is situated in an area surrounded by native wetlands and national parks to the south and east, with Port Philip Bay being approximately 2.5 km’s to the east
major vehicular access is provided via Point Cook Road which provided access to the Princes Freeway some 5 km’s to the north of the property
major transport infrastructure in the area is limited to a bus services operating on Saltwater Promenade providing access to Aircraft Rail Station located 5.5 km’s to the north of the subject property.

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5.3 Project description

5.3.1 Current status

The subject site provides for a relatively level and predominantly cleared parcel of land with preliminary development to the northern portion of the site. Saltwater Promenade has been constructed providing a bitumen-sealed, two-way road which divides the site into two parts. The northern parcel also includes the construction of Brookdale Road and preliminary excavation works. The southern portion of the site fronting Point Cook Homestead Road provides a vacant parcel of rural land with an open drainage channel traversing the site.

Pictures taken at the time of our inspection are set out at Appendix B.

5.3.2 Proposed development

We have been provided with preliminary concept plans for the land to be subdivided into a residential estate to comprise 275 lots.

A summary of the residential lots to be developed is presented below.

Table 12: Summary of the residential lots to be developed at the Yang Land

Description	Number of lots	Lot size range (m 2)
Residential lots	2	250-299
Residential lots	250	300-349
Residential lots	16	350-399
Residential lots	4	400-449
Residential lots	-	450-499
Residential lots	2	500-600
Residential lots	1	600-700
Total / average	275	250-700

Source: Aveo Group, PBD

Other sites

We note the parent parcel also includes a childcare centre site of 2,850 m[2] (now sold), a sporting field of 2.932 hectares which will be dedicated to Council and a school site of 3.419 hectares. These sites are not included in the Proposed Acquisitions.

Table 13: Summary of other sites at the Yang Land

Site Site 1	Description Child care	Stage 64	Size (m 2) 2,850
Site 2	Sporting field	64	29,320
Site 3	School site	64	34,190
Total			66,360

Source: PBD

Note: We note that these sites have not been included within our assessment of market value

We have assumed that the sporting field dedication fully meets the open space contribution for the proposed development of the subject property.

Therefore the total area to be developed is approximately 14.34 hectares.

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A plan showing the proposed development is presented below.

Figure 10: Map of the proposed the Yang Land development

==> picture [248 x 490] intentionally omitted <==

Source: Aveo Group, PBD Notes: Proposed School, Oval and Child Care are not part of the Proposed Acquisitions.

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5.4 Project delivery deed

A summary of the attributes of the project delivery deed between Aveo Group and PBD are presented in the table below:

Table 14: Summary of the project delivery deed

==> picture [494 x 33] intentionally omitted <==

Date	3 December 2013	3 December 2013
Parties	FKP	Residential Developments Pty Limited (for the purposes of this table, FKP)
	PBD (Yang Land) Pty Limited
	PBD (Guarantor).
Background	It is intended that FKP and PBD will co-operate in the development of the land and the execution
	of the development as set out in this deed.
Participation fee	In consideration for the appointment of PBD to assist with the development and being paid the
	development services fee, PBD agrees (subject to clause 6.5, to pay the participation fee as follows:
		$18,000,000 (exclusive of GST) payable by PBD to FKP as follows:
		a) The Deposit ($100,000) on or before the date of this deed;
		b) $1,700,000 (exclusive of GST) within 5 business days of the conditions being satisfied
		or waived
		c) In respect of each sale contract, payments must be made in accordance with the
		following formula:
		PPF = $14,500,000 / N
		Where:
		N = the total number of Lots or in the event the total number of Lots is not known at
		settlement of the relevant Lot, 242 and;
		PPF shall be paid by PBD within 10 business days of the last day of the month in
		which settlement of the relevant lot occurs;
		d) Any outstanding amount on the Sunset Date on or before 15 June 2014.
Development services fee	FKP	agrees to pay the Development Services Fee as follows:
	a)	The Development Services Fee is calculated as the difference between:
		i. The Sales Proceeds for each of the Lots; and
		ii. The GST payable by FKP in respect of the sale of a Lot
FKP Works	FKP	will, in accordance with the FKP Works Program and FKP Works Budget, perform or
	procure the performance of the FKP Works. FKP Works are defined as:
		All works and activities required to carry on the development, including to undertake and
		complete road works, services (including drainage, sewerage, water, electricity and
		communications) and other infrastructure necessary or as required by any Authority as a
		condition of granting any necessary approval in respect of the subdivision of the Land for the
		purposes of the development and otherwise to develop the land for sale to end purchasers.
FKP management fee	$200,000 (exclusive of GST)

Source: Aveo Group, PBD Note: FKP Residential Developments Pty Limited is a subsidiary of Aveo Group

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5.5 SWOT analysis

A strengths, weaknesses, opportunities and threats (SWOT) analysis for the Yang Land are presented in the table below.

Table 15: The Yang Land SWOT analysis

	Strengths		Weaknesses
	the property is located in area which has experienced rapid		lack of direct public transport infrastructure to the Melbourne
	development in the past five year period		CBD
	the site is located 800 metres east of Point Cook Road, which is a major road in the south-western corridor	 	a large amount of competing developments in close proximity the planning permit for individual stages is yet to be approved
 	access to major arterial roadways within the region is considered easy and direct, with the Princes Freeway located approximately 5 km’s to the north close proximity to Port Phillip Bay and national parks	 	challenges to source funding for development sites at present no detailed engineering plans and construction cost estimates.
	good range of community and retail centres in Point Cook
	the site is free of any significant easements and
	encumbrances affecting the development potential of the
	property
	improved market conditions.
	Opportunities		Threats
	obtain pre-sales for the lots		increasing competition in the local market
	improved business and consumer sentiment		increase in interest rates
	PBD to introduce its network of Asian buyers.		delays in planning approvals
			obtaining pre-sales due to competition
			increases in development costs
			change in Council policy.

Source: Deloitte Corporate Finance

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6 Overview of the Milton

6.1 Introduction

The property is located on the fringe of Brisbane city in the suburb of Milton, approximately 2.5 km’s south-west from the Brisbane CBD. The site comprises an amalgamation of nine lots which combine to form a rectangular shaped development site with extended frontage to Railway Terrace. The site has been formed and provides a level building contour, with the rear north-western boundary abutting Milton railway station. Construction has commenced on the proposed development.

The project comprises a mixed-use transport orientated development known as ‘The Milton’ incorporating 303 1, 2 and 3 bedroom residential units configured within a 30 storey tower. The project also includes a ground level promenade with 5 retail units, commercial office accommodation on level 2 with a mezzanine floor and a four level podium car park (including storage area) with a total of 334 spaces.

Communal facilities include a recreation lounge, executive lounge, gymnasium, lap pool, sauna, individual barbeque pods and observation deck. The total project Gross Floor Area is 28,024m[2] with a plot ratio of approximately 7.9 times site area.

6.2 Land particulars

6.2.1 Title details

The key title details for The Milton are presented in the table below.

Table 16: Key title details for The Milton

Interest		Fee simple in possession
Description		Lots 11, 13, 15, 17, 21 and 23 on RP79609; Lot 100 on SP 189107; Lot 215 on RP 18374; and Part of Lot 23 on SP 260020 (replacing Lot 22 SP 129984).
Registered	proprietor	FKP Commercial Developments Pty Limited (FKP Commercial Developments). Refer to specific comment below with regard to Queensland Rail (QR) Accessway / Rail Corridor Land.

Source: PBD

Note: FKP Commercial Developments is a subsidiary of Aveo Group

The following easements, encumbrances and interests are noted on the current title search documents:

Rights and interests reserved to the Crown by Deed of Grant No. 19551150 (WSA 9); Deed of Grant No. 19551149 (WSA 10); and Deed of Grant No. 11776228 (Lot 215 on RP 18374)
Mortgage No 709103393 02/11/2005 at 15:38 Australian and New Zealand Banking Group Limited A.C.N. 005 357 522
Lease No. 703403637 21/06/1999 at 10:52 Quejasco Pty Limited A.C.N. 083 531 757
Amendment No. 705229700 30/11/2001 at 11:43 Lease: 703403637
Easement No. 601721373 (J440157N) 14/04/1988 Burdening the land to Lot 1 on RP 214478 over “Easement C” on RP 214481 to a height to RL 6.575 AHD
Easement No. 704793622 30/05/2001 at 11:15 benefiting the land over Easement D on SP 140111
Easement No. 704793625 30/05//2001 at 11:16 benefiting the land over Lot 2 on RP 47113.

There are two registered leases on Lot 100. These are assumed to have expired. The beneficial and burdening easements registered on Lot 215 are for ‘right of way’. These easements are not considered to diminish the utility of the site and have been incorporated into the design of the proposed development.

Lot 23 on SP260020 (replacing Lot 22 on SP129984) forms part of the parent site, however this land is owned by the State of Queensland represented by the Department of Transport (QR Accessway / Rail Corridor Land). We have not detailed title particulars for this lot.

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6.2.2 Statutory assessment of land value

The statutory assessment of the land value of The Milton is presented in the table below.

Table 17: Statutory assessment of the land value

Address	Value ($)	Effective date
41 Railway Terrace	670,000	30 June 2013
43 Railway Terrace	670,000	30 June 2013
45 Railway Terrace	1,200,000	30 June 2013
49 Railway Terrace	730,000	30 June 2013
51 Railway Terrace	620,000	30 June 2013
53 Railway Terrace	650,000	30 June 2013
55 Railway Terrace	650,000	30 June 2013
Total	5,190,000

Source: Pricefinder

Note: Excludes QR Accessway and Railway Corridor Land

The statutory valuation is utilised for rating and taxation purposes and is noted in this report as a matter of record only.

6.2.3 Land description, dimensions and area

The land description, dimensions and area of The Milton are presented in the table below.

Table 18: Land description, dimensions and area of The Milton

==> picture [494 x 32] intentionally omitted <==

Site	The site comprises an amalgamation of nine lots which combine to form a rectangular shaped development site with extended frontage to Railway Terrace. The site has been formed and provides a level building contour, with the rear north-western boundary abutting Milton railway station. Construction has commenced on the proposed development

Position and identification	The land has been identified by reference to the cadastral map, registered/survey plans and from visual inspection. It is located to the north-western side of Railway Terrace, being the third to tenth allotments to the east of the Railway Terrace and Park Road junction

Site Area	3,535 m ~~2~~ Note:Site area includes QR Accessway & Rail Corridor land owned by the Queensland Department of Transport andMain Roads.

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Flood status

We have researched Council records which identified that the property is subject to flooding. The property was substantially impacted by the 1893, 1974 and 2011 major flood events as shown in the picture below.

Source: Queensland Reconstructive Authority

The property level ranges from a minimum of 3.6 meters up to a maximum of 9.5 meters, with the most recent 2011 flood event reaching 6.0 meters, as outlined in the following tables:

As summarised in the approved decision notice conditions (23 October 2013), ‘All proposed building levels, floor levels and ancillary structures are to have the appropriate freeboard in accordance with Council’s “Subdivision and Development Guidelines” so as not to be flooded during a 50 year ARI local flood event or a 100 year ARI creek or river flood event, whichever is the higher flood level and to ensure that residential minimum habitable floor levels are 5.6 metres AHD, non-habitable floor levels are 5.4 metres AHD (residential), and commercial/retail floor levels are at 5.1 metres AHD’. Source: Brisbane City Council Flood Report

Source: Pricefinder

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The following image is a cadastral map of the subject site.

==> picture [164 x 8] intentionally omitted <==

----- Start of picture text -----

Figure 13: Map of The Milton development
----- End of picture text -----

==> picture [305 x 213] intentionally omitted <==

Source: RP Data

6.2.4 Planning

The key planning attributes for The Milton are presented in the table below.

Table 19: Key planning attributes for The Milton

==> picture [494 x 32] intentionally omitted <==

Planning scheme	Brisbane City Planning Scheme	Brisbane City Planning Scheme
Designation and intent	MP2	– Multi-purpose Centre MP2 – major centre
		Centres have the capacity to be well serviced by public, bike and pedestrian modes of transport.
		Higher density residential development is encouraged both as mixed use development and residential
		buildings, which integrate and enhance the fabric of the centre and promote the use of public transport.
		Developments that include residential uses will allow greater gross floor area and building height.
		Major centres are to provide significant locations for shop, office, entertainment, cultural, tourist and
		residential accommodation outside of the City Centre.
	Milton Station Neighbourhood Plan
		The Milton Station Neighbourhood Plan is a local plan under the city plan. This plan contains specific
		additional local planning requirements. Where it conflicts with the requirements of the city plan, the
		Milton Station Neighbourhood Plan prevails.
		The property is located in Precinct 2 - Mixed Use Residential.
		The Mixed Use Residential Precinct is located within easy walking distance of Milton Railway Station
		and will accommodate primarily residential uses, with some retail and commercial uses, in a high
		density environment.
		Retail and commercial activities will occur in the lower levels of residential buildings fronting Railway
		Terrace and Cribb Street, to capitalise on the accessibility to public transport and generate activity
		along these pedestrian spines.
		The increased activity along Railway Terrace will complement the established vibrancy and variety of
		Park Road and generate an important focal point within the area.
		The railway corridor provides opportunities for the development of air rights above Milton Station and
		the corridor itself.
		Greater height and plot ratio allowances will be provided for developments that incorporate and
		integrate with the railway station and provide substantial improvements to the station itself, station
		access and the station’s interface with the public realm.
		The entrance to Milton Station from Railway Terrace will be prominent in the streetscape and provide
		for convenient and legible paths for pedestrians and cyclists to access the platform areas and continue
		to Milton Road.

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Railway Terrace will be an important connection through the precinct and will complement the established vibrancy and variety of Park Road.
Streetscape improvements will be achieved along Railway Terrace to support the renewal of Interests in the precinct. This will include street trees, high quality pavements and finishes and street furniture.

Suburban Centre Improvements Project (SCIP)

A SCIP delivers improvements to suburban centres, improving the centre’s attractiveness, amenity, safety, accessibility and identity. These elements collectively contribute to the overall commercial vitality of the centre. SCIPs can improve property value and act as a catalyst for economic investment. The aim of a SCIP is to improve the commercial vitality of an area by delivering infrastructure improvement that:

creates a distinctive sense of place for local residents, visitors and businesses
provides a high-quality, attractive public space where people want to visit and shop  improves the accessibility, connectivity and safety of a centre.

Source: Brisbane City Council

We consider the proposed development reflects the intent of the SCIP.

Maximum gross floor area and maximum building height	Maximum gross floor area and maximum building height
Precinct	Site area	Maximum gross floor area	Maximum building height
Mixed use Residential	Less than 1,200 m 2 1,200 m 2to less than 2,000 m 2	1.5 x site area 5.0 x site area	4 storeys 15 storeys
	2,000 m 2or greater	6.0 x site area	20 storeys
	2,000 m 2or greater (where	8.0 x site area	30 storeys
	incorporates and integrates with the
	railway station or corridor and
	provides station improvements)

	Source: Brisbane City Council We consider the proposed development reflects the intent of the SCIP.	Source: Brisbane City Council We consider the proposed development reflects the intent of the SCIP.	Source: Brisbane City Council We consider the proposed development reflects the intent of the SCIP.
Performance criteria	Maximum gross floor area and maximum building height
			Maximum gross floor area Maximum building height
	Precinct	Site area

	Mixed use Residential	Less than 1,200 m 2	1.5 x site area 4 storeys
		1,200 m 2to less than 2,000 m 2	5.0 x site area 15 storeys

		2,000 m 2or greater	6.0 x site area 20 storeys
		2,000 m 2or greater (where incorporates and integrates with the railway station or corridor and provides station improvements)	8.0 x site area 30 storeys

Development approval Other Matters	Source: Brisbane City Council Milton Station Neighbourhood Plan

Source: Brisbane City Council, Aveo Group, PBD, Deloitte Corporate Finance

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6.2.5 Environmental considerations

The key environmental considerations related to The Milton are presented in the table below.

Table 20: Key environmental considerations related to The Milton

Current use	The property is currently utilised as a construction site for ‘The Milton’ residential project.
Previous use	The site was previously utilised for residential and commercial purposes.
Existing issues raising concern	None.
Environmental reports	We have undertaken a sample search on the Environmental Management and Contaminated Land Registers on Lot 15 on RP79609. The search revealed Lot 15 is not included on either register. We have not undertaken a search on the balance lots which form part of the parent parcel. Should further investigations reveal environmental concerns of any way on the balance lots, the report should be referred back to the valuer. We have also researched a historical Site Contamination Report undertaken by Douglas Partners in June 2009. This report was undertaken as part of the Development Approval process and concluded there was no environmental problems impacting on the site. We have not been advised of any environmental issues or concerns since construction commenced on the site.

Asbestos	None noted.

Source: Aveo Group, PBD, Deloitte Corporate Finance

No obvious environmental issues where apparent at the time of inspection.

6.2.6 Locality and surrounding development

The Milton’s locality and surrounding development is as follows:

the property is located in the fringe city suburb of Milton, approximately 2.5 km’s south-west from the Brisbane CBD
the surrounding area is predominantly characterised by a mix of low-rise commercial / retail buildings of various age and quality, interspersed with multi-unit residential development, detached residential housing and older style industrial premises
Park Road located directly to the south is a popular retail and restaurant precinct, with Milton Brewery located to the opposite side of Milton Railway Station which abuts the subject site to the south-west.

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A location map of the property is presented below.

Figure 11: Location map of The Milton

==> picture [456 x 292] intentionally omitted <==

----- Start of picture text -----

Subject
----- End of picture text -----

Source: whereis.com

6.2.7 Road system, access and exposure

An overview of the road system, access and exposure of The Milton is presented below.

Table 21: Road system, access and exposure

==> picture [494 x 32] intentionally omitted <==

Road system	The property has frontage to Railway Terrace which is a two-way bitumen sealed roadway with concrete kerb and channelling. It generally runs north-east to south-west in orientation connecting with Park Road to the south-west and Cribb Street to the north-east. Railway Terrace carries medium volumes of vehicular traffic.

Access	Access to the site is directly off Railway Terrace.
Exposure	The site is considered to have good exposure with extended frontage to Railway Terrace. The site also has exposure to Milton Railway Station.

Source: Aveo Group, PBD, Deloitte Corporate Finance

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6.2.8 Services and amenities

Key services and amenities of The Milton are presented below.

Table 22: Key services and amenities

Services All normal services are available for connection to the land including reticulated water, sewerage, telephone and electricity services. Amenities The nearest retail amenity is located along Park Road within 50 metres of the site. Park Road is considered a major lifestyle and retail precinct, with a number of popular cafés and restaurant. Public transport is provided in the immediate location including train and bus services. Milton is a key station in the Brisbane rail network connecting the Ipswich and Springfield lines with the Brisbane CBD.

Source: Aveo Group, PBD, Deloitte Corporate Finance

6.3 Project description

6.3.1 Current status

Construction has commenced on the proposed development. Pictures taken at the time of our inspection are set out at Appendix C.

In addition, the end property has also been the subject of extensive marketing and as a result 228 of the total 303 residential units have been pre-sold and 4 of the 5 retail units are subject to offers to lease.

6.3.2 Project description

An overview of the construction details, schedule of finishes, retail, commercial and storage units and car parks is presented in the sections below.

Construction details

General construction details of the building are as follows:

Table 23: General construction details of building

Floors	Concrete slab to ground and suspended concrete slab to upper floor – Main awning and awning to roof top.
Structure	Reinforced concrete.
External walls	Rendered/painted concrete block work, precast panelling and FC sheeting.
Internal walls	Predominantly painted fixed plasterboard.
Windows	Aluminium framed glazing.
Roof	Metal roof sheeting.

Source: Aveo Group, PBD

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Schedule of finishes

A schedule of finishes for The Milton is presented in the table below.

Table 24: Schedule of finishes for The Milton

==> picture [494 x 32] intentionally omitted <==

Finishes		Floor to wall glazing to maximise views and natural light
		Concealed bulk-head air-conditioning units
		Low energy LED lighting
		Ceiling fans and acoustically sealed
		Feature laminate panelling and reconstituted stone bench tops to kitchens
		Bathrooms with feature mosaic tiles, semi-frameless high shower screens and mirror cabinets
		Glass balustrades with stainless steel pipe handrails
		Glass balustrades to balconies with stainless steel pipe handrails
		Mix of carpet, vinyl, stone, tile and timber veneer throughout the building
		White goods include dishwasher, range hood, cook-top, oven, refrigerator, microwave and dryer
		Sanitary ware selection includes stainless steel laundry and kitchen sinks, vitreous white china vanity
		basin and toilet suites
Communal areas		Public communal spaces with textured wall coverings, bespoke carpets and timber wallpapering
		throughout
		Lift lobbies with custom carpet, timber wall panelling, feature lighting and wallpaper. Lobbies will be
		acoustically treated
		Residents facilities include a recreation lounge, executive lounge, gymnasium, sauna, steam room and
		amenities on Level 6. All rooms will be suitably sound treated and air-conditioned
		The executive lounge features expansive glass façade, air-conditioning and modern kitchen with fully
		integrated appliances
Retail		Retail promenade with designer tiles, natural stone, timber, glass, aluminium and steel.
		Services will be concealed with Australian Standard compliant slip rating floors.
		Designer lighting and signage.
		Shop fronts will be a commercial system with concealed heads and sills and powder coated mullions
		high clear-glass shop fronts.
		Units will be left in basic but compliant shell form with exposed services and air conditioning in the
		ceiling, plasterboard part walls and bare concrete floors.
		Fit outs will include meters and basic sink unit.
		All retail units will be provided with back of house access to the loading dock and refuse areas.
		Front of house public amenities are provided to the eastern end of the promenade with accessible
		facilities and toilets suitable for retail tenants.
Commercial		Premium office space standard.
		Front façade is glazed in a performance tinted glass from floor to ceiling.
		Two way exposed grid ceiling system with drop in square edge matt finish mineral fibre acoustic tiles.
		Minimum 2700 millimetre ceiling height throughout.
		Air-conditioning, fire and lighting will be provided in a generic layout.
		Floor will be durable commercial carpet.
		Each side of the commercial component contains toilets and a small kitchenette.

Source: Aveo Group, PBD

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Residential units summary

A summary of the residential units at The Milton is presented below.

Table 25: Residential units summary

Unit Type	Number	% sold pre-sales	% mix	Internal area (m 2)	External area (m 2)	Total area (m 2)	Total area (m 2)	Average GSA (m 2)
1 Bedroom	75		25%	50m 2– 60m 2	9m 2– 67m 2	59m 2–	127m 2	79m 2
1 Bedroom + study	76	138	25%	52m 2– 74m 2	8m 2– 58m 2	60m 2–	110m 2	76m 2
2 Bedroom	0		0%	-	-	-		-
2 Bedroom + study	88	60	29%	74m 2– 83m 2	8m 2– 131m 2	82m 2–	211m 2	120m 2
3 Bedroom	55	28	18%	80m 2– 188m 2	11m 2– 25m 2	91m 2–	188m 2	120m 2
Dual key	9	2	3%	80m 2	8m 2	88m 2		88m 2
Total	303	228	100%

Source: Aveo Group, PBD

Note:

There is a discrepancy between the approved plans and current pricing and sales matrix. We have been advised by the developer that this is due to a number of unit types being recently reconfigured, with the architectural plans to be amended based on the pricing/sales matrix. This valuation is based on the critical condition that any variances on the approved plans are amended and approved in accordance with the current sales and pricing matrix. We reserve the right to amend our valuation accordingly.

Set out in Appendix D are illustrative layouts of the floors relating to the residential units.

Retail, commercial and storage units summary

The proposed development will incorporate five ground level retail units fronting a new promenade off Railway Terrace and commercial office accommodation located on level 2. The podium car park also includes additional storage area. We note the approved plans identify seven retail units which have been reconfigured to five tenancies based on the proposed tenancy mix and offers to lease. A schedule of net lettable area (NLA) provided by Aveo Group is detailed as follows:

Table 26: Summary of retail, commercial and storage units

Category	Unit number	NLA (m 2)
Retail	1	203.0 m 2
	2	94.0 m 2
	3	214.0 m 2
	4	194.5 m 2
	5	415.0 m 2
	Total	1,120.5 m 2
Commercial	1	1,150.0 m 2
	Total	1,150.0 m 2
Storage	1	29.6 m 2
	2	33.5 m 2
	3	28.8 m 2
	4	26.5 m 2
	5	27.9 m 2
	Total	146.3 m 2

Source: Aveo Group, PBD, Deloitte Corporate Finance

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Car parks summary

A summary of the car park allocations is detailed as follows:

Table 27: Summary of car park allocations

Unit type	Number
Residential	294
Commercial / retail	20
Visitor	20
Total	334

Source: Aveo Group, PBD, Deloitte Corporate Finance

We have not provided an individual break-down of the car park allocations for the residential units, however note the majority of units are provided with a single car park.

6.4 Project agreements

6.4.1 Development agreement

A summary of the key terms of the development agreement are presented below.

Table 28: Summary of the development agreement

==> picture [494 x 33] intentionally omitted <==

Date	6 January 2014
Parties	FKP Commercial Developments Pty Limited (for the purposes of this table, FKP) PBD (Milton) Pty Limited PBD (Guarantor). It is intended that FKP will engage PBD to provide assistance in respect of the Development and that in return for the Incentive Fee, PBD will contribute project management, development and construction expertise to the project. $22,300,000 payable by PBD to FKP on or before 15 June 2014. The participation fee is not to be treated as an equity contribution. The fee payable to PBD from the proceeds of the completion of sale contracts. The participants agree that distributions will only be made from available cash resources and not on an accrual basis.

Background

Participation Fee

Incentive Fee

Project Programme	9th August 2013 to 30 September 2015. Total project period of approximately 25 months.
Services	The general services to be provided by the participants include but are not limited to the following: Co- ordination, procuration of consents, recommendations, regular reports, maintenance of records, progress reports, budget reports, information, monitoring progress, engagement and management of the builder, insurance, plant and equipment, completion of reports in respect of disputes, accounts, registration of plans and recommendation for variation or extension of time. Specific services that FKP is responsible to undertake includes feasibility and costs planning; design development and documentation; construction and post construction. The participants shall be jointly responsible for concept design review and marketing, including the sale of apartments.

Source: Aveo Group, PBD, Deloitte Corporate Finance Note: FKP Commercial Developments is a subsidiary of Aveo Group

6.4.2 Other agreements

We have been provided with various agreements related to The Milton. These are detailed as follows:

infrastructure agreement – Milton railway station project
instrument of agreement – Construction contract

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management rights sale agreement.

We are advised by PBD and Aveo Group that these agreements are commercially sensitive and are subject to confidentiality limitations that restrict the respective parties (including subsidiaries of Aveo Group) from publicly disclosing details of the agreements. These agreements have been reviewed by us and considered in our assessment of value of The Milton.

For information purposes, we note the following:

the construction contract is with an established commercial builder who has previously undertaken projects of the scale and complexity of the subject and is considered to have the ability to complete the requirements of the contract
the management rights sale agreement is for the sale of the management rights to the complex (upon completion) and is to an experienced international hotel owner, operator and investor with a significant international portfolio of rooms in hotels, resorts and serviced suites.

Overall we consider that the construction risk associated with the project is significantly reduced. The builder is one of the leading apartment builders in Queensland and is highly experienced in multi-level apartment projects such as the subject. Based on the project having a fixed price contract, there is unlikely to be any major variations in price, unless there are specific redesign needs of the project, which we consider would be unlikely or minimal.

6.5 SWOT analysis

A SWOT analysis for The Milton is presented in the table below.

Table 29: SWOT analysis

	Strengths		Weaknesses
	The development is located in a prominent position with good		The development is located adjacent Milton railway station
	exposure to Milton Road. This is considered beneficial from a		with associated rail noise and medium volumes of pedestrian
	marketing perspective		traffic flow in-and-around the immediate area
	Development Approval granted by the Minister for State		The property is located in close proximity to Milton Brewery
	Development, Infrastructure and Planning dated 23 October		which has the potential to emit aerosols, fumes, light, noise,
	2013. We have been advised by the developer that all		odour, particles and smoke
	required approvals and permits have been obtained to facilitate the development with the exception of approval for external sewer and stormwater works. This has been novated into the construction contract		The Milton project comprises a total of 303 residential units, which diminishes a ‘point of difference’ from a re-sale perspective given there is likely to be a number of similar style units available for sale at any given time on completion
	Infrastructure Agreement executed to permit construction of		of the project. This may limit capital and rental growth over
	the Milton Railway Station upgrade in accordance with the approval conditions		the short term A large proportion of unsold units are priced in excess of
	Lump sum construction contract negotiated with Hutchinson		$750,000. This stock has a narrow breadth of market given
	Builders. Considered experienced builders in the delivery of		the limited number of buyers in the higher price brackets at
	large scale mixed-use projects similar to the subject		present.
	The project provides good retail and public transport amenity
	given its close proximity to the popular restaurant and retail
	precinct located along Park Road and bus / train services
	operating in the immediate area
	A total of 228 unconditional pre-sales have been achieved on
	the project to date since official marketing commenced in
	mid-2010, with a further 9 pre-sales in various stages of
	negotiation. This reflects approximately 74% of stock based
	on unconditional sales
	A large percentage of new units projects currently being
	marketed for sale are located in the northern fringe in
	comparison to the western corridor (subject location) which
	has a fewer number of residential projects in comparison
	the management rights have been sold to an experienced
	international hotel owner, operator and investor with a
	significant international portfolio of rooms in hotels, resorts
	and serviced suites.

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Opportunities Threats
The Park Road precinct and surrounding area continues to  There is a discrepancy between the approved plans and develop with a number of new residential projects earmarked current pricing/ sales matrix. We have been advised by the for the immediate area. This will add to the aesthetic appeal developer this is due to a number of unit types being recently of the micro-location which is considered beneficial to the reconfigured, with the architectural plans to be amended subject development based on the pricing/sales matrix. This valuation is based on
Construction has commenced on the proposed development the critical condition that any variances on the approved plans are amended and approved in accordance with the
which provides buyers with certainty current sales/ pricing matrix. We reserve the right to amend
The sale of the higher priced units will be predominantly our valuation accordingly targeted to owner occupiers and empty nesters residing within the western corridor. We consider some of this stock  A large scale residential development known as ‘Wesmark’ is proposed to the opposite side of Railway Terrace. Tower 1 is
will be targeted to overseas buyers currently being marketed for sale and incorporates 171
The residential unit market in Brisbane is continuing to residential units configured within a 20 level tower. This will improve on the back of more positive sentiment entering the impede direct view corridors to the north-east for similar market from both owner occupiers and investors positioned units in the subject development up to circa Level
20, should ‘Wesmark’ proceed as currently proposed
Potential to attract popular cafe/restaurant operators in the retail component based on increased demand from the residential occupants within the subject building and increased pedestrian traffic flow from Milton railway station
There are approximately 150 units currently being marketed for sale in the immediate area covering three new residential projects (excluding the subject). This provides buyers with a wide choice of product and competition to the subject development. However, we note that the majority of units being marketed for sale within the location and wider city fringe are one and two bedroom units priced sub $650,000 whilst approximately 82% of unsold stock within the subject development is priced above circa $750,000
We have not attributed a value to the storage component with the project feasibility however note this may provide an additional source of income or sales revenue going forward
The subject project is the only development located within the Milton Precinct with a height of 30 levels. This does offer a point of difference
2
The development incorporates 1,150m of commercial office accommodation on level 2 of the building. The commercial leasing market is considered soft at present with high vacancy rates, limited tenant demand and strong competition between vendors/developers to secure new tenants. We consider the commercial component in the building will be difficult to either sell in vacant possession or lease-up in the current market, with an extended period (9 to 12 months) and a high incentive level of circa 30% to attract a tenant(s)
PBD to introduce its network of Asian buyers.
The sales prices currently being achieved within the subject are considered high relative to competing sales evidence for one, two and three bedroom unit stock. This may create valuation support issues and settlement risk
Based on discussions with the marketing sales agent (360 Project Marketing), a number of the units have been sold with incentives. No specific financial information has been provided in this regard. We do note that a number of other new residential developments currently being marketed are offering similar incentives to the subject project
Sales prices achieved to date are at the high end of the market range to the extent buyers are seeking finance from the purchaser, there may be issues in obtaining end buyer valuation support for finance.

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7 Valuation of the Yang Land

7.1 Valuation methodology

The value of the Yang Land has been assessed by using the residual cash flow approach. This methodology involves working back from the assessed gross realisation of the project (i.e. sales proceeds of the sale of the end lots) to establish the residual value of the property after the costs associated with the project (including development costs and financing costs and an appropriate development profit) have been deducted. The development profit is based on industry benchmarks and takes into account the various risks associated with the project including market and construction risk.

The relative merits of the subject property and each of the comparable sales are analysed and compared having regard to matters such as location, aspect, topography and its effect on development, the size of the land and the scale of the development, conditions of the development consent and relativity of time to current market conditions. The direct comparison approach contains a high degree of value judgement when sites are not directly comparable in one or a number of variables.

7.2 Gross realisation estimate

Based on the sales evidence as detailed at Appendix E, we have assessed the gross realisation for the residential lots ‘as if complete’ on an individual sale basis compared to the competing estates as follows. The Subject marker is our estimated range for the Yang Land lots:

Figure 12: Summary of 300 m2 to 349 m2 lot sales by estate

==> picture [364 x 185] intentionally omitted <==

----- Start of picture text -----

$270,000
$250,000
$230,000
$210,000
$190,000
$170,000
----- End of picture text -----

Source: RP Data, Deloitte Corporate Finance

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Figure 13: Summary of 350 m2 to 399 m2 lot sales by estate

==> picture [361 x 185] intentionally omitted <==

----- Start of picture text -----

$285,000
$265,000
$245,000
$225,000
$205,000
$185,000
$165,000
----- End of picture text -----

Source: RP Data, Deloitte Corporate Finance

Figure 14: Summary of 400 m2 to 449 m2 lot sales by estate

==> picture [361 x 177] intentionally omitted <==

----- Start of picture text -----

$310,000
$290,000
$270,000
$250,000
$230,000
$210,000
$190,000
$170,000
----- End of picture text -----

Source: RP Data, Deloitte Corporate Finance

Figure 15: Summary of 500 m2 to 599 m2 lot sales by estate

==> picture [361 x 176] intentionally omitted <==

----- Start of picture text -----

$345,000
$325,000
$305,000
$285,000
$265,000
$245,000
----- End of picture text -----

Source: RP Data, Deloitte Corporate Finance

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In assessing average lot values we have undertaken a detailed analysis of pricing and sales achieved in competing estates for the various categories of lot sizes.

A summary of the adopted average lot values and gross realisation is presented below.

Table 30: Summary of adopted average lot values and gross realisation

Description	Number of lots	Lot size range (m 2)	Assessed average value per lot ($)	Gross realisation ($)
Residential lots	2	250-299	200,000	400,000
Residential lots	250	300-349	206,680	51,670,000
Residential lots	16	350-399	228,750	3,660,000
Residential lots	4	400-449	243,750	975,000
Residential lots	-	450-499	229,500	-
Residential lots	2	500-600	265,000	530,000
Residential lots	1	600-700	280,000	280,000
Total / average	275	250-700		57,515,000

Source: Deloitte Corporate Finance

The gross realisation of the subject units ‘as if complete’ on an individual sale basis is assessed at $57,515,000 (inclusive of GST), with an average value of $209,145 per lot.

We consider the individual values of the lots achievable at our assessed valuations given a reasonable selling period and appropriate marketing campaign, with an agent suitably experienced in the project marketing of developments of this nature in a professional manner.

7.3 Sales rate

We have researched sales rates of comparable projects throughout Point Cook which generally demonstrated a range of 4 to 8 lots per month on an average calendar year.

Based on the quality and location of the subject estate we have adopted a sales rate of circa 6 lots per month.

7.4 Development timing

The timing of the development is shown as follows:

Table 31: Summary of the Yang Land development timing

Item	Start Month	End Month	Duration (Months)
Site acquisition	0	3	4
Obtain approvals	3	6	3
Stage 1 (33 lots)	7	13	7
Stage 2 (28 lots)	12	18	7
Stage 3 (29 lots)	17	23	7
Stage 4 (40 lots)	22	28	7
Stage 5 (37 lots)	27	33	7
Stage 6 (43 lots)	32	38	7
Stage 7 (33 lots)	37	43	7
Stage 8 (32 lots)	42	48	7

Source: Deloitte Corporate Finance

Each stage includes pre-sales, construction and settlement phases, respectively.

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7.5 Development and selling cost summary

A summary of the development and selling costs is detailed as follows:

Table 32: Summary of development and selling costs

						Total Cost	Total Cost	Cost Per Lot
$						(excluding GST)	(including GST)	(including GST)

Acquisition costs	1					910,000	1,001,000	3,640
Construction costs			2			10,636,500	11,700,150	42,546
Land holding costs				3		149,773	149,773	545
Miscellaneous costs					4	2,020,909	2,223,000	8,084
Professional fees		5				2,113,892	2,325,281	8,456
Selling costs 5						2,506,850	2,757,535	10,027
Statutory fees 6						2,773,750	2,773,750	10,086

Source: Deloitte Corporate Finance

Notes:

1. Acquisition costs comprise estimated costs associated with the transaction.

2. Construction costs are based on an estimate prepared by Breese Pitt Dixon.

3. Land holding costs include Land Tax and rates.

4. Miscellaneous costs are a notional allowance for any additional consultants fees required

5. Professional fees include 2.0% commissions, 2.0% for marketing and conveyancing at $750 per lot.

6. Statutory fees comprise local authority water and sewerage head works charges and contributions and are as advised by Aveo Group.

The development costs on a per lot basis are considered to be in line with acceptable market parameters.

7.6 GST

In regard to the subject project, we have been advised by the developer that it will be registered under the general tax rule. Accordingly, the developer must remit 1/11th of the gross realisations for the residential component. We have estimated the potential GST liability at 9.1% of the residential gross realisation being $5,228,636.

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7.7 Residual cash flow summary

We have utilised Estate Master software Version 5.30 in order to calculate the residual cash flow results. We have assessed a market value range of $17.5 million to $18.5 million, however, for the purposes of our analysis have adopted the mid-point of $18.0 million. A summary of the cash flow analysis is detailed as follows.

Table 33: Residual cash flow analysis summary

$	Per Lot	Total
Gross realisation (including GST)	209,145	57,515,000
Selling costs (including marketing)	(10,027)	(2,757,535)
Net realisation	199,118	54,757,465
GST	(19,013)	(5,228,636)
Net realisation (after GST paid)	180,105	49,528,829

*Development costs*
Total development costs (including GST)	155,476	42,755,995
GST	(6,705)	(1,843,769)
Total developments costs (excluding GST)	148,772	40,912,226

Source: Deloitte Corporate Finance

We have assumed the project is fully debt financed in line with standard industry practice for the valuation of this type of property.

7.8 Requisite returns

Typical return on cost hurdle rates for property development projects are generally considered to be in the order of 15% to 30% depending on the nature of the project, the location, the stage in the development lifecycle, the degree to which approvals have been achieved and the overall risk profile of the project.

Given the risk profile of the proposed development and estimated development horizon of approximately 48 months, we have assessed a target development margin after interest at the lower end of the market range of 17.5% to 20.0% and a target internal rate of return (IRR) before interest of circa 17.5%.

These are considered to be adequate hurdle rates, on the basis of our critical assumption that the development approval is in place and given that construction work has commenced, the size of the project and the current strength of the market to absorb the proposed stock within the estimated selling period.

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7.9 Summary of our valuation of the Yang Land

The above approach results in a value in the range of $17.5 million to $18.5 million which implies the following returns:

Table 34: Summary of requisite return


	Value of $17.5 million Value of $18.5 million


Development margin – after interest	21.59% 17.93%
IRR – before interest	18.81% 16.82%
Developers profit	$9,282,824 $7,947,910
Developers profit per lot	$33,756 $28,901
Maximum debt exposure	$26,376,854 $27,478,851
Project term (months)	48 48
Project value per hectare	$1,220,363 $1,290,098
Project value per Lot	$63,636 $67,273

Source: Deloitte Corporate Finance

Based on the adopted cash flow parameters, the sensitivity analysis for the project based on the mid-point valuation figure of $18.0 million is assessed as follows:

Table 35: Sensitivity analysis

		Development
	Profit after interest	margin after
Sensitivity	($)	interest	IRR before interest
Variation to gross realisation -5%	5,925,254	13.54%	14.57%
Variation to gross realisation +5%	11,283,608	25.87%	20.87%
Sales span -30%	8,744,648	20.08%	18.29%
Sales span +30%	8,488,091	19.38%	17.34%
Variation to construction costs -20%	11,065,714	26.84%	20.75%
Variation to construction costs +20%	6,142,241	13.31%	14.76%

Source: Deloitte Corporate Finance

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7.10 Cross check - direct comparison approach

Based on the residual cash flow analysis, the site value ‘as is’ with Development Approval for the proposed development scheme, is assessed at $17.5 million to $18.5 million, however for the purposes of our analysis we have adopted a mid-point of $18.0 million. This equates to $1,255,230 per hectare of site area and $65,455 per lot.

We have detailed the sales evidence against our assessment (mid-point of $18.0 million) of the subject property value in the following graphs (detailed information on the comparable sales is set out in Appendix E):

Figure 16: Sales evidence vs subject ($ per hectare)

==> picture [390 x 210] intentionally omitted <==

----- Start of picture text -----

220 Geelong Road, Werribee
852-870 Taylors Road, Plumpton
440-448 Point Cook Road, Point Cook
Hachetts Road, Werribee
333 Point Cook Road, Point Cook
275 Snyedes Road, Point Cook
Point Cook Homestead Road, Point Cook
Subject
500,000 700,000 900,000 1,100,000 1,300,000
$ per hectare
----- End of picture text -----

Source: Deloitte Corporate Finance

Figure 17: Sales evidence vs subject ($ per lot)

==> picture [391 x 213] intentionally omitted <==

----- Start of picture text -----

220 Geelong Road, Werribee
Hachetts Road, Werribee
333 Point Cook Road, Point Cook
852-870 Taylors Road, Plumpton
275 Snyedes Road, Point Cook
Point Cook Homestead Road, Point Cook
Subject
30,000 50,000 70,000 90,000 110,000
$ per lot
----- End of picture text -----

Source: Deloitte Corporate Finance

Based upon the above analysis, we believe our assessed market value of the subject site on an “as is” basis in the range of $17.5 million to $18.5 million exclusive of GST is within market parameters.

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8 Valuation of The Milton

8.1 Valuation methodology

The market value of the site ‘as is’ with development approval for the proposed development scheme, benefit of presales and costs expended to date has been assessed by residual cash flow analysis. Due to the advanced stage of the project with construction commenced, we have utilised the Residual Cash flow Approach as the primary method of valuation. This methodology involves working back from the indicative gross realisation estimate of the project to establish the residual value of the property after the costs associated with the project (including development costs, financing costs and an appropriate development profit) have been deducted. The development profit is based on industry benchmarks and takes into account the various risks associated with the project including market and construction risk.

In undertaking the residual cash flow analysis, we have determined an indicative gross realisation estimate for the residential, retail and commercial accommodation within the development, including the value of the management rights. The gross realisation estimate of the residential units ‘as if complete’ on an individual sale basis has been assessed using the direct comparison approach, wherein the relative merits of the proposed units and each of the sales are analysed and compared having regard to matters such as location, aspect, size, quality of improvements and the relativity of time to current market conditions. Based on this analysis, a value expressed as a rate per square metre of gross saleable area (GSA) is derived for application to the subject units.

The realisation estimate for the management rights has been assessed by direct comparison approach on a rate per total number of units and a rate per unit in the letting pool.

8.2 Gross realisation estimate

8.2.1 Residential component

Based on the sales evidence as detailed in Appendix G, we have assessed an indicative gross realisation estimate for the unsold residential units ‘as if complete’ on an individual sale basis as presented below.

Table 36: Summary of the residential component

Unit type	Number	Internal area(m 2)	External area(m 2)	GSA (m 2)	Value($)	$/m 2 net	$/m 2 gross	Average $/unit

1 Bed	10	515	90	605	4,540,000	8,816	7,504	454,000
2 Bed	32	2,638	355	2,993	24,195,000	9,172	8,084	756,094
3 Bed	26	2,606	102	2,708	20,620,000	7,913	7,614	793,077
Dual key	7	560	56	616	5,110,000	9,125	8,295	730,000
Total / average	75	84	8	92	54,465,000	8,619	7,868	726,200
Unconditional sales	228				136,662,913
Total / average	303	71	11	82	191,127,913	8,886	7,658	630,785

Source: Deloitte Corporate Finance

We consider the price points achieved on the unconditional sales are high in comparison to competing unit stock and above the majority of competing sales evidence. However, given that approximately 75% of the stock has been sold, there is supporting evidence of market acceptance at the higher price points; however this will require valuation support at settlement which is considered a project risk.

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The gross realisation estimate of the subject units ‘as if complete’ on an individual sale basis is assessed at $191,127,913 (inclusive of GST), with an average value of $630,785 per unit. This reflects a pro rata value of $7,658 per square metre of the GSA.

We consider the individual values of the units are saleable at our assessed valuations given a reasonable selling period and appropriate marketing campaign, with an agent suitably experienced in the project marketing of developments of this nature in a professional like manner.

8.2.2 Retail component

We provide the following net rental assessment for the retail units within the development as follows having regard to the evidence at Appendix H:

Table 37: net lettable assessment - rental component

Unit number	NLA (m 2)	Gross rent $/m 2 of NLA	Outgoings $/m 2 of NLA	$/m 2Net	Total net rent per annum ($)
Retail 1	203	750	84	666	135,198
Retail 2	94	825	84	741	69,654
Retail 3	214	750	84	666	142,524
Retail 4	195	750	84	666	129,537
Retail 5	415	650	84	566	234,890
Total	1,121				711,803
Average	224	745	84	661	142,361

Source: Deloitte Corporate Finance

The adopted rentals show an average net rental range of $566 per square metre to $741 per square metre of NLA. This reflects a blended net rental rate of $661 per square metre net across the retail component.

Based on the evidence at Appendix H, we have adopted a capitalisation rate of 8.50% for the retail component. This is considered appropriate given the risk associated in securing suitable food related operators as proposed and to achieve the benchmark rents for these target tenancies. We have also allowed for a 20% incentive across the tenancies based on a 7 year term, which equates to a total incentive of $835,145. This has been provisioned as a development cost within the project feasibility. Accordingly, we provide the following assessment.

Table 38: Valuation assessment of retail component

Adopted net annual market income	$711,803
Adopted capitalisation rate	8.50%
Value as calculated	$8,374,153
Value as rounded	$8,375,000

Source: Deloitte Corporate Finance

The adopted value of $8,375,000 (excluding GST) reflects a blended pro rata value of $7,471 per square metre of NLA.

8.2.3 Commercial component

The lease evidence set out at Appendix I displays a gross rental range of between $400/m² to $515/m² per square metre of NLA.

We have been provided with an estimated outgoings budget for the commercial component of $96,600 per annum. This reflects $84 per square metre of NLA. It should be noted that mixed use developments such as the subject traditionally have higher outgoings budgets than standard commercial buildings. The adopted outgoings are considered to lie at the lower end of market parameters.

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Based on the above, we provide the following net rental assessment for the commercial component within the subject property, below.

Table 39: Net rental assessment – commercial component

Unit Number	Tenant	NLA (m 2)	Gross rent per m 2 ($)	Outgoings per m 2 ($)	Net rent per m 2 ($)	Total net rent per annum ($)
1	Commercial Office	1,150	460	84	376	432,400

Source: Deloitte Corporate Finance

The sales evidence in Appendix I displays an initial yield range of 7.25% to 11.24%, an equivalent yield range of 8.78% to 11.32% and a rate per square metre of NLA range of $1,934 to $4,307.

Discussions with agents active in the fringe office market indicate the market has deteriorated significantly over the past 12 months due to Government austerity measures and a slow-down in mining sector expansion. Vacancy levels in the fringe are reported at circa 12%, however this figure is likely to be a lot higher given the significant amount of sub-lease space entering the market which is not being accurately recorded. This has resulted in a high degree of competition between developer’s to secure commercial tenants with incentive levels currently in the order of 30%, and as high as 40% in some instances.

Commercial strata units located in predominantly residential mixed-use developments have limited appeal to investors, with the majority of owner occupiers seeking tenancy areas sub 200 m2. We note the current building design configures the commercial component into two circa 600 m2 tenancies, with each tenancy provided with separate entry and amenities. We also note the approval allows for indoor sport and recreation use. We consider a gymnasium would be suitable for part of this area.

We have been advised that up to ten car parks will be provided to the commercial component. Based on the maximum number of car parks to be provided, the car park ratio is 1:115.

Based on the above, we have adopted a capitalisation rate of 9.5% for the commercial component. This is considered appropriate given the sales and leasing risk. We have also allowed for a 30% incentive across the tenancies based on a 5 year term, which equates to a total incentive of $793,500. This has been provisioned as a development cost within the project feasibility.

Accordingly, we provide the following assessment.

Table 40: Assessed value of the commercial component

==> picture [494 x 36] intentionally omitted <==

Adopted net annual market income	$432,400
Adopted capitalisation rate	9.50%
Value as calculated	$4,551,579
Value as rounded	$4,550,000
$/m 2 of NLA	$3,957

Source: Deloitte Corporate Finance

The adopted value of $4,550,000 (excluding GST) reflects a pro rata value of $3,957 per square metre of NLA.

8.2.4 Management rights

We have been provided with a copy of the management rights agreement dated 14 November 2012 for The Milton. We are advised by PBD that this agreement is subject to confidentiality agreements that limit the ability of either party to disclose details of the agreements. Accordingly, we have not presented specific details of the management rights sale agreement; however we have reviewed and considered the agreement in our assessment of the value of The Milton’s management rights.

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We have not been provided with a current detailed summary of the buyer profile for the pre-sold units within the development, however based on discussions with the marketing agent (360 project marketing), coupled with historical sales information provided by Aveo Group, we have concluded approximately 70% of the units have been sold to investors, with the balance owner occupiers. Refer to Appendix J for an analysis of comparable management rights agreements.

We have determined approximately 215 units will be included in the letting pool. This equates to circa 71% of total units within the project. We have assessed the value of the management rights at $4,715,000 (excluding GST). This equates to $15,561 per total number of units or $21,930 per unit in the letting pool.

8.3 Sales rate

We have been advised that official marketing on the project commenced mid-2010. A sales summary schedule has been provided which identifies 228 unconditional pre-sales to date, with a further nine pre-sales in various stages of negotiation. The units have been purchased by a mix of owner occupiers and investors, both, local, interstate and international. There is circa 65 overseas buyers to date, which represents approximately 32 percent of pre-sold stock.

We have tabulated the unconditional pre-sales on a per year basis as follows.

Table 41: Summary of unconditional pre-sales per year

Year	Number of units	Value($)	Average $/unit	$/m 2	net	$/m 2gross	Sales rate per annum

2010	54	32,774,750	606,940		8,884	7,015	9.00
2011	60	32,947,049	549,117		8,700	7,208	5.00
2012	50	27,948,000	558,690		9,127	7,699	4.17
2013	63	41,754,114	662,764		9,201	8,296	5.25
2014	1	1,239,000	1,239,000	10,774		9,605	0.08
Total / average	228	136,662,913	599,399		8,996	7,578	5.43

Source: Aveo Group, PBD, Deloitte Corporate Finance

The above table reflects an overall sales rate of 5.43 units per month; however the 2010 financial year sales do not factor in soft marketing prior to the official launch and is based on a 6 month period (half year period). This has inflated the project sales rate. Further, a large proportion of stock sold over this period is in the lower priced brackets. We have adopted an overall sales rate of 3 units per month which includes the 20 month construction period and a post construction sales/settlement period of 3 months.

8.4 Development timing

A summary of the development timing for The Milton is detailed as follows.

Table 42: Summary of the development timing for The Milton

			Duration
Item	Start month	End month	(months)
Site purchase	0	0	1
Site settlement	1	1	1
Construction	2	21	20
Registration of Titles	22	22	1
Presale settlements	23	24	2
Balance sale settlements	23	25	3

Source: Deloitte Corporate Finance

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8.5 Development and selling cost summary

A summary of the development and selling costs is detailed as follows.

Table 43: Summary of the development and selling costs


	Total cost (excluding GST) Total cost (including GST) Cost per lot (including GST)
$

Acquisition costs 1	2,598,025 2,601,025 8,584
Construction costs 2	88,606,517 97,467,169 321674
Council fees / infrastructure charges 3	8,079,000 8,079,000 26,663
Holding costs 4	217,600 217,600 718
Miscellaneous costs 5	2,684,867 2,790,489 9209
Professional fees 6	300,000 330,000 1,089
Selling costs 7	8,364,313 9,200,744 30,365

Source: Deloitte Corporate Finance

Notes:

The adopted costs have been reconciled between the project cashflow and work in progress schedule (i.e. cost to complete) provided by Aveo Group.

1. Acquisition costs comprise estimated costs associated with the transaction.

2. Construction costs are on a cost to complete basis and include contract price variations less costs expended to date and a construction contingency.

3. Council fees and infrastructure charges are on a cost to complete basis.

4. Holding costs include rates and and land tax.

5. Miscellaneous costs include contribution to Aveo Group’s personnel costs to the project (as per agreement) and retail and commercial incentives.

6. Professional fees are on cost to complete basis and excludes professional fees included within the construction contract.

Selling costs for residential units on cost to complete basis. This includes commissions on balance payments of pre-sold units, unsold stock, retail and commercial units and on the management rights sale. Selling costs also include sale related legal costs.

An estimate of construction costs and work in progress schedule provided by Aveo Group, and post our reconciliation, show a total development cost (excluding interest) of $110,850,322 (exclusive of GST), which equates to $3,956 per square metre of gross floor area and $365,842 per unit (excluding the retail/commercial units).

8.6 GST

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8.7 Residual cash flow summary

We have utilised Estate Master software Version 5.30 in order to calculate the residual cash flow results. A summary of the cash flow analysis is detailed as follows.

Table 44: Residual cash flow analysis summary

	Per Lot ($)	Total ($)
Gross realisation (including GST)	689,597	208,947,913
Selling costs (including marketing)	30,385	(9,200,744)
Net realisation	659,232	199,747,169
GST	57,344	(17,375,265)
Net realisation (after GST paid)	601,887	182,371,904
Developments costs
Total development costs (including GST)	553,932	167,841,545
GST	(32,461)	(9,835,705)
Total developments costs (excluding GST)	521,471	158,005,840

Source: Deloitte Corporate Finance

Based on the residual cash flow analysis, the project site value ‘as is’ with Development Approval for the proposed development scheme, benefit of pre-sales and costs expended to date, is assessed at between $43.0 million to $47.0 million, adopting the mid-point of the value range at $45.0 million for the purposes of the cash flow analysis. This equates to $12,730 per square metre of site area and $148,515 per unit, excluding the commercial and retail component.

We have assumed the project is fully debt financed in line with standard industry practice for the valuation of this type of property.

8.8 Requisite returns

It should be clearly recognised the proposed transaction is considered a unique situation in that the majority of project risks, including development approvals, construction costs and design, and pre-sales risk has been removed or substantially reduced. Hence, the risk rate analysis based on a typical development site transaction is different, with no current market sales evidence to benchmark against the subject. We consider the value of the site under this situation reflects a ‘project value’ based on the development costs expended to date and reduced risk profile of the overall project.

A typical residential or mixed use development would seek a return on cost in the order of 18% to 20% after interest, with an IRR before interest of circa 25% based on a two to three year development horizon. These return hurdles are based on a development site without the benefit of approvals, detailed design, pre-sales or locked in construction costs. Hence, the risk profile associated with the subject site is considered significantly less.

Typically, a developer or investor will accept a significantly lower return to acquire a site or enter into a development agreement or joint venture arrangement, whereby the project is significantly de-risked with approvals, fixed price construction contract secured and tenant pre-commitment in place or pre-sale hurdle thresholds being achieved (i.e. 70% of total stock). Target return hurdles for similar types of developments generally lie in the order of 14% to 15% return on cost, with an IRR of circa 17% to 18%. Based on discussion with industry participants, the IRR is considered the principle driver for benchmarking the potential return on investment for large scale developments such as the subject. In addition, we have also considered the returns sought on other property development vehicles that have substantial sales risk removed or reduced, i.e. large scale industrial with 100% pre-committed tenant, or neighbourhood retail centre with pre-committed Woolworths or Coles supermarket. These types of developments are seeing participants seek returns on costs between 12% and 15% due to the reduced sales risk.

We are of the opinion the subject development reflects a similar risk and return profile for a heavily de-risked project. On this basis, we consider an IRR before interest of 16% to 19% would be attractive to an investor, provided that the return on the cost was in excess of 12.5%.

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8.9 Summary of our valuation of The Milton

We have assessed a project site value range with the benefit of Development Approval for the proposed development scheme, pre-sales and costs expended to date, of $43.0 million to $47.0 million which shows the following returns:

Table 45: Requisite return summary

	Value of	Value of
	$43.0 million	$47.0 million
Development margin (after interest)	16.23%	12.96%
IRR (before interest)	19.27%	16.65%
Developers profit	$26,750,657	$21,981,473
Developers profit per unit (residential units)	$88,286	$72,546
Maximum debt exposure	$154,657,389	$159,377,280
Project term (months)	25	25
Project value per square metre of site area	$12,164	$13,296
Project value per square metre of gross floor area	$1,534	$1,677
Project value per unit	$141,914	$155,116

Source: Deloitte Corporate Finance

Based on the adopted cash flow parameters, the sensitivity analysis for the project based on the mid-point valuation figure of $45.0 million is assessed as follows:

Table 46: Sensitivity analysis

Sensitivity Profit after Interest ($)	Development margin after interest IRR before interest


Variation to gross realisation -5% 14,916,253	8.93% 13.63%

Variation to gross realisation +5% 33,815,876	20.21% 22.00%

Sales span -30% 24,711,641	14.81% 18.57%

Sales span +30% 24,002,570	14.32% 17.35%

Variation to construction costs -5% 28,963,870	17.81% 20.22%

Variation to construction costs +5% 19,768,260	11.51% 15.69%

Source: Deloitte Corporate Finance

PBD’s 50% interest equates to a value of $21.5 million to $23.5 million, with a mid-point value of $22.5 million.

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9 Valuation of the consideration

In the following section we set out the consideration payable by PBD for the Yang Land and The Milton.

9.1 The Yang Land

Under the terms of the project delivery deed, PBD will pay a participation fee to Aveo Group determined as follows.

$100,000 on the date that the project delivery deed was executed on 3 December 2013
$1,700,000 within five business days of the conditions of the project delivery deed being satisfied. These conditions include, amongst others, obtaining approval from financiers, the Commonwealth Government and all necessary permits, consents and approvals from the relevant authorities. This is to be completed within 130 days from the execution of the project delivery deed
$1,700,000 within five business days of the date on which the plan of subdivision for Stage 1 is registered at Land Victoria
for each sale contract, $14,500,000 divided by the number of lots per sale contract, to a maximum of 242 lots
any outstanding amount 18 months after the execution of the project delivery deed.

In addition, the project delivery deed also grants to Aveo Group an option to sell to PBD any unsold parcels of land at the end of the 18 month period. The purchase price will be any outstanding amount owing to Aveo Group under the payment terms described above.

Accordingly, to determine the net present value of the consideration for the Yang Land, we have discounted the consideration assuming that the lots will be realised evenly over the 18 month period. To discount the Yang Land consideration, we have applied a discount rate of 7.0% based on the RBA published data with respect to lending rates for businesses and also the rates assumed in our valuation of the Yang Land.

Table 47: Net present value of the Yang Land consideration

			Months 1
$’000 (unless otherwise stated)	Month 1	Month 5	to 18	Total
On execution of the project delivery deed	100			100
150 days after execution of the project delivery deed		1,700		1,700
Subdivision Stage 1 payment		1,700		1,700
Average monthly sales (per month)			806	14,500
Remaining amount				1,700
Total				18,000
Discount rate (%)				7.0%
Net present value of consideration				17,155

Source: The Yang Land project delivery deed, Deloitte Corporate Finance

Based on the above analysis, we have assessed the net present value of the consideration for the Yang Land to be $17.2 million.

9.2 The Milton

Under the terms of the development agreement, PBD will pay a participation fee to Aveo Group determined as follows.

$100,000 on the date that the development agreement was executed on 6 January 2014
$22,200,000 on or before 15 June 2014, subject to Aveo Group complying with its obligations under the development agreement.

We note that in addition to the participation fee payable to Aveo Group, from 31 October 2013, PBD is required to contribute its share of construction costs incurred at The Milton.

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As the final payment is due six months after the execution of the development agreement, we do not consider the time value of money to be material and accordingly have not discounted the consideration for The Milton. On this basis, we have assumed consideration of $22.3 million for The Milton.

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Appendix A: Glossary

Reference Definition AFSL Australian Financial Services Licence APESB Accounting Professional and Ethical Standards Board ASIC Australian Securities and Investments Commission ASIC Regulatory Guide 111 ASIC Regulatory Guide 111: Contents of experts reports ASX Australian Securities Exchange AUASB Auditing and Assurance Standards Board AUD Australian dollars Aveo Group Aveo Group Limited bps Basis points CBD Central business district Deloitte Corporate Finance Deloitte Corporate Finance Pty Limited Directors, the The directors of PBD EBIT Earnings before interest and tax EBITDA Earnings before interest, tax, depreciation and amortisation FICS Financial Industry Complaints Service FKP Commercial Developments FKP Commercial Developments Pty Limited, a subsidiary of Aveo Group FKP Residential Developments FKP Residential Developments Pty Limited, a subsidiary of Aveo Group FSG Financial Services Guide FY Financial year GSA Gross saleable area ICAA Institute of Chartered Accountants in Australia Independent Directors The independent directors of PBD Interests, the The interests to be acquired in The Milton and the Yang Land IRR Internal rate of return km Kilometre Listing Rule, the The listing rules of the ASX 2 m Square meters Milton, the A 50% development interest in The Milton project located in Brisbane, Queensland Mulpha Group Mulpha International Bhd NLA Net lettable area Non-associated Shareholders Shareholders not associated with the Proposed Acquisitions NPAT Net profit after tax NTA Net tangible assets PAMDA Property Agent and Motor Dealers Act PBD PBD Developments Limited PDS Product Disclosure Statement Proposed Acquisition PBD’s offer to acquire the Interests QR Queensland Rail Limited SCIP Suburban Centre Improvement Project Shareholders Existing holders of PBD shares SHK Sun Hung Kai International Bank [Brunei] Limited SWOT Strengths, weaknesses, opportunities and threats Yang Land, the An economic interest in the development of a 14 hectare non-contiguous en-globo site, forming a part of the Saltwater Coast residential estate in Point Cook, Victoria

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Appendix B: Current status of the Yang Land

The following photos illustrate the current status of the Yang Land development site:

Figure 18: Northern side of the Yang Land

==> picture [232 x 174] intentionally omitted <==

Figure 20: Southern side of the Yang Land

==> picture [232 x 174] intentionally omitted <==

Figure 19: Northern side of the Yang Land

==> picture [225 x 174] intentionally omitted <==

Figure 21: Southern side of the Yang Land

==> picture [236 x 174] intentionally omitted <==

Figure 22: Southern side from Point Cook Homestead Road

==> picture [232 x 173] intentionally omitted <==

Figure 23: Southern side from Point Cook Homestead Road

==> picture [231 x 173] intentionally omitted <==

Source: Deloitte Corporate Finance

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Appendix C: Current status of The Milton

The following photos illustrate the current status of The Milton development site:

Figure 24: Photographs of The Milton construction site

==> picture [401 x 341] intentionally omitted <==

Source: Deloitte Corporate Finance

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Appendix D: Layout of residential units and commercial space

Residential units layout

There are multiple unit types and layouts throughout the development. Due to the number of configurations, we have not described individual unit layouts in detail. Detailed below is the typical floor layouts configured throughout the building.

Figure 25: Typical tower overview plan for levels 8 to 14

==> picture [455 x 185] intentionally omitted <==

==> picture [120 x 8] intentionally omitted <==

----- Start of picture text -----

Source: Approved plans, Aveo Group
----- End of picture text -----

Figure 26: Typical tower overview plan for levels 15 to 24

==> picture [455 x 186] intentionally omitted <==

Source: Approved plans, Aveo Group

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Figure 27: Typical tower overview plan levels 25 to 30

==> picture [453 x 170] intentionally omitted <==

Source: Approved plans, Aveo Group

Commercial and retail space layout

Figure 28: Ground floor (Level 1)

==> picture [444 x 188] intentionally omitted <==

Source: Approved plans, Aveo Group

Figure 29: Level 2 Overview Plan

==> picture [439 x 201] intentionally omitted <==

Source: Approved plans, Aveo Group

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Appendix E: Benchmark evidence for gross realisation estimates for the Yang Land

We have identified comparable estates to seek sales evidence in the following map:

Figure 30: Map of comparable property estates in the Point Cook area

==> picture [475 x 222] intentionally omitted <==

Source: Google Maps, Deloitte Corporate Finance Note: * denotes approximate distance

These estates and the sales achieved over the past 12 months are summarised as follows.

Featherbrook Estate

Commencing construction in 2007, Featherbrook Estate is an established community developed by Central Equity, comprising over 1,100 homes, a local village including medical centre, community centre, childcare centre and a range of entertainment and recreational facilities. Featherbrook Estate is located approximately 4 km’s from the subject property.

Table 48: Summary of lot sales at Featherbrook Estate

			Sales price
	Number of
Lot size range	lots sold	Low ($)	High ($)	Median ($)
300-349m 2	0	-	-	-
350-399m 2	4	229,000	259,000	234,000
400-449m 2	1	244,000	244,000	244,000
450-499m 2	7	259,000	265,000	262,000
500-599m 2	6	269,000	289,000	279,000

Source: PDS Live Notes:

The above sales occurred between January 2013 and October 2013.

We note that there are other sales that have occurred within the estate not detailed in the table above, however are for lots that are far larger than the existing supply in the subject estate.

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This estate has a higher proportion of large lots and as such, is considered superior to the subject property.

Parkbrook Estate

Following on from Featherbrook Estate, Central Equity released the latest development Parkbrook Estate in 2011. Offering a range of block sizes and house and land packages, Parkbrook comprises of over 325 Lots. Parkbrook Estate is located approximately 5 km’s from the subject property.

Table 49: Summary of lot sales at Parkbrook Estate

			Sales price
	Number of
Lot size range	lots sold	Low ($)	High ($)	Median ($)
300-349m 2	2	255,000	259,000	257,000
350-399m 2	12	235,000	260,000	242,001
400-449m 2	11	255,000	289,000	265,000
450-499m 2	10	269,000	285,000	271,000
500-599m 2	2	289,000	289,000	289,000

Source: PDS Live Notes:

The above sales occurred between January 2013 and October 2013.

We note that there are other sales that have occurred within the estate not detailed in the table above, however are for lots that are far larger than the existing supply in the subject estate.

This estate has a higher proportion of large lots and as such, is considered superior to the subject property.

Paragon Estate

Paragon Estate is a boutique, 350 lot estate currently being developed by Pask Property. Offering a variety of block sizes, house and land packages and a variety of low maintenance Townhouse options, Paragon is located within walking distance to the Saltwater reserve sporting complex and a range of parks. Paragon Estate is located approximately 500 metres from the subject property.

Table 50: Summary of lot sales at Paragon Estate

			Sales price
	Number of
Lot size range	lots sold	Low ($)	High ($)	Median ($)
300-349m 2	4	195,000	210,000	195,000
350-399m 2	5	205,000	210,000	210,000
400-449m 2	3	215,000	220,000	220,000
450-499m 2	1	250,000	250,000	250,000
500-599m 2	5	250,000	262,000	255,000

Source: PDS Live Notes:

The above sales occurred between January 2013 and October 2013.

We note that there are other sales that have occurred within the estate not detailed in the table above, however are for lots that are far larger than the existing supply in the subject estate.

This estate has a higher proportion of smaller lots and townhouses and lacks the amenity of the subject and as such is considered inferior.

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Thirty 30 Estate

Thirty 30 is a 400 lot community designed estate developed by Point Cook Land offering a range of small lot housing and land packages. Situated within walking distance to the local town centre, medical and childcare facilities and a range of entertainment precincts. Thirty 30 Estate is located approximately 4 km’s from the subject property.

Table 51: Summary of lot sales at Thirty 30 Estate

			Sales price
	Number of
Lot size range	lots sold	Low ($)	High ($)	Median ($)
300-349m 2	2	180,000	180,000	180,000
350-399m 2	11	180,000	225,000	195,000
400-449m 2	13	180,000	202,950	195,000
450-499m 2	0	-	-	-
500-599m 2	0	-	-	-

Source: PDS Live Notes:

The above sales occurred between January 2013 and October 2013.

We note that there are other sales that have occurred within the estate not detailed in the table above, however are for lots that are far larger than the existing supply in the subject estate.

This estate is considered inferior to the subject property.

Saratoga Estate

Comprising over 700 lots, Saratoga offers a range of land options along with several land packages. This master planned community developed by Wolfdene, will provide residents with designed parks and gardens, purpose built childcare, recreation and community facilities, swimming pool, running tracks, bike paths and café/entertainment precinct. Saratoga Estate is located approximately 5 km’s from the subject property.

Table 52: Summary of lot sales at Saratoga Estate

			Sales price
	Number of
Lot size range	lots sold	Low ($)	High ($)	Median ($)
300-349m 2	6	193,400	235,000	216,250
350-399m 2	18	193,400	257,500	235,000
400-449m 2	15	195,000	265,000	235,000
450-499m 2	3	250,500	282,500	280,000
500-599m 2	0	-	-	-

Source: PDS Live Notes:

The above sales occurred between January 2013 and October 2013.

We note that there are other sales that have occurred within the estate not detailed in the table above, however are for lots that are far larger than the existing supply in the subject estate.

This estate has a higher proportion of large lots and is considered superior to the subject property.

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Kingsford Estate

A master planned designed community offering relaxed community living designed and developed by Peet. Spanning 40 hectares with 567 home sites and 2 hectares of parklands and open space. Kingsford Estate is approximately 6 km’s from the subject site.

Table 53: Summary of lot sales at Kingsford Estate

			Sales price
	Number of
Lot size range	lots sold	Low ($)	High ($)	Median ($)
300-349m 2	2	210,000	220,000	215,000
350-399m 2	7	220,000	235,000	235,000
400-449m 2	28	235,000	245,000	235,000
450-499m 2	2	225,000	249,000	237,000
500-599m 2	14	250,000	299,000	279,000

Source: PDS Live Notes:

The above sales occurred between January 2013 and October 2013.

We note that there are other sales that have occurred within the estate not detailed in the table above, however are for lots that are far larger than the existing supply in the subject estate.

Although considered to be in an inferior location to the subject, this estate has a higher proportion of larger lots and is therefore considered to be superior.

Saltwater Coast

Saltwater Estate is a master planned community developed by Aveo Group comprising over 2,500 lots boasting a large range of lot sizes and house and land packages. The Estate is located within walking distance to parklands, neighbourhood shopping and childcare centres, primary schools, sporting ovals and public transport. Residents benefit from exclusive use of the on-site lifestyle centres which include a gymnasium, pool, tennis court and variety of retail facilities. The subject property falls under the Saltwater Coast master plan.

Table 54: Summary of lot sales at Saltwater Coast

			Sales price
	Number of
Lot size range	lots sold	Low ($)	High ($)	Median ($)
300-349m 2	4	197,500	215,000	207,500
350-399m 2	5	235,000	281,500	279,000
400-449m 2	31	239,500	346,500	270,000
450-499m 2	1	283,500	283,500	283,500
500-599m 2	6	302,500	336,500	330,750

Source: PDS Live Notes:

The above sales occurred between January 2013 and October 2013.

We note that there are other sales that have occurred within the estate not detailed in the table above, however are for lots that are far larger than the existing supply in the subject estate.

This estate is within close proximity to the subject land and offers slightly better amenity and is considered slightly superior overall.

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Appendix F: Comparable sales to the Yang Land

We have examined the most recent market activity for residential subdivision sites within the immediate area, having particular regard to the sales evidence below, which set the parameters by which the value of the subject site can be determined.

There have been limited sales of Interests in the immediate area with the majority of sales being subject to confidentiality clauses and hence we have been unable to confirm the exact detail of the sale. Due to the lack of recent comparable sales evidence we have utilised older sales for comparison purposes.

These sales are summarised as follows:

Table 55: Comparable sales to the Yang Land

Address Zoning Sale Date Land Area (HA) Sale Price Rate ($/pha) Rate per lot	Lot Yield
275 Snyedes Road, Point Residential 1 Zone May-10 20.05 $25,250,000 $1,259,352 $83,333	15.11
Cook
A regular shaped englobo parcel with frontage to Snyedes Road, and situated between the developing Featherbrook Estate to the east and a proposed estate
to the west. A proposed concept plan estimates a subdivision comprising of 303 lots and a gross yield of 15.11 lots per hectare. The site incorporates a
drainage easement totalling approximately 1.7 hectares and requires an additional 0.5 hectares for the widening of Snyedes Road. The site will also require
substantial fill to allow drainage to the proposed development. Site was purchased by the adjoining owner, Central Equity.
Point Cook Homestead Road, Residential 1 Zone May-10 24.00 $31,300,000 $1,304,167 $104,333	12.5
Point Cook
A regular shaped englbo parcel with frontage to Homestead Road, and situated to the western boundary of the Point Cook Homestead Road Development
Plan. The property sold without a permit, although a concept plan idicates a yield of approximately 300 lots reflecting 12.5 lots per hectare.
852-870 Taylors Road, Urban Growth Zone May-13 10.00 $7,540,000 $754,000 $75,400	10
Plumpton
Comprises a rectangular shaped inside allotment located approximately 10kms to the Melbourne CBD. The property will comprise upon completion circa
100 lots.
Hachetts Road, Werribee May-13 125.00 $103,000,000 $824,000 $51,500	16
The property comprises an irregualr shaped inside allotement with the potential to split easily into three separate lots. The property will comprise upon
completion circa 2,000 lots.
220 Geelong Road, Werribee Dec-13 12.00 $7,000,000 $583,333 $35,000	16.6
Under contract, some site issues, a lot of fill required (circa $2M). The property will comprise upon completion circa 200 lots.
333 Point Cook Road, Point Residential 1 Zone Apr-12 33.34 $30,000,000 $899,820 $63,830	14.10
Cook
The property is situated to the eastern side of Point Cook road, adjoining the Sanctuary Lakes development, providing somewhat of an infill site.	The site
was purchased by the Sunland Group. A concept plan indicates the site will yield 470 lots with a density of 14.10 lots per hectare.
440-448 Point Cook Road, Farming Zoning Asking 14.00 $11,000,000 $785,714 N/A	N/A
Point Cook
Currently for sale. Current marketing agent suggests interest around the $11,000,000 mark. Site is within the UGB, however, requires rezoning.

Source: PDS Live, Biggin Scott Land Note:

All sales above are exclusive of GST.

The above sales evidence reflects a wide range of values ranging between $785,714 to $1,304,167 per hectare and $35,000 to $104,333 per lot depending upon the location, zoning, development lead time and land size. Sales at the upper end of the range are zoned and ready for development, whilst those at the other end require a rezoning process to be undertaken. Average lot size proposed and therefore the number of proposed lots is a major factor in the analysed rate per lot with subdivisions comprising a high proportion of small lot product reflecting a low rate per proposed lot.

In comparison to the subject property, we have taken into account the following factors:

the site is part of an established estate
existing infrastructure in place reduces costs associated with the development of the balance of the estate
size of the land holding.

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Appendix G: Benchmark evidence for gross realisation estimates for The Milton – Residential component

Residential unit - Sales evidence

The comparable sales evidence that we have considered is summarised over the following pages.

Table 56: ‘Siena’, 35-39 McDougall Street, Milton QLD

Project details


Project details
Developer	Excel Development Group, Oracles Estates
	and Silverstone Developments
Architect	Unknown
Number of units	49
Levels	10
Car spaces	Unknown
Finishes	Standard to High
Design attributes	Single Tower
Common facilities	BBQ common area, two passenger lifts, ground
	level lobby and feature entry.
Timing	Currently under construction with pre-sales
	occurring
Project summary

The development is located in Milton approximately 2 km’s west of the Brisbane CBD. It comprises 49 apartments within a 10 level tower and two basement levels for resident and visitor parking. There are 35 two bedroom apartments and 14 one bedroom apartments. The Sienna residential project is being developed by a consortium comprising Excel Development Group, Oracle Estates Pty Limited and Silverstone Developments.

Sales evidence

			GSA range	Average	Price range	Average	Average $/m²
Product type	Number	% mix	(m²)	GSA (m²)	($)	price ($)	GSA
1 Bed	4	18%	63 – 69	65	360,000 - 420,000	375,000	5,732
1 + Study	7	31%	64 - 65	64	415,000 - 440,000	427,000	6,683
2 Bed	11	51%	87 – 98	93	545,000 - 660,000	589,000	6,333
Total / average	22	100%	63 - 98	79	360,000 - 660,000	499,000	6,335

Source: Deloitte Corporate Finance

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Table 57: ‘Westmark’ 22-36 Railway Terrace, Milton QLD

	Project details Developer Walker Corporation Architect Bureau^proberts Number of units Tower 1 – 171 Tower 2 – 146 Levels Tower 1 – 20 Tower 2 – 16 Car spaces Unknown Finishes Standard Design attributes Two Towers Common facilities Gymnasium, lap pool, barbeques, grassed areas, sky lounge and sun deck. Timing Unknown

	Project summary

The development is located in Milton opposite the subject property. Tower 1 is currently being marketed comprising 171 units within a 20 level building, with a mix of 1 and 2 bedroom apartments. The development will also include a communal recreation deck located on level 6, gymnasium, elevated lap pool, barbecues, grassed areas, sun deck and an exclusive residents sky lounge located on level 20. Retail opportunities at ground level are targeting a supermarket, café and restaurant. We have been advised that 60% of the residential units have been sold. Due to confidentiality reasons, these sales have not been summarised, however are understood to be within the pricing range as detailed below.

Price list for apartments (Tower 1)

			GSA range	Average		Average	Average $/m²
Product type	Number	% mix	(m²)	GSA (m²)	Price range ($)	price ($)	GSA
1 Bed	109	65%	58 - 64	59	370,000 - 470,000	443,399	7,476
2 Bed	58	35%	73 – 81	77	560,000 - 650,000	597,802	7,624
Total / average	167	100%	58 - 81		370,000 - 650,000

Source: Deloitte Corporate Finance

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Table 58: ‘Savoir Faire Residences’ 27 Manning Street, Milton QLD

	Project details Developer Kozmic Developments Architect Unknown Number of units 65 Levels 15 Car spaces 65 Finishes Standard to high Design attributes Single Tower Common facilities Gymnasium, pool, barbeque area, bicycle storage. Timing Estimated completion December 2014.

	Project summary

The development is located in Milton approximately 2 km’s west of the Brisbane CBD. It comprises 65 units within a 14 level tower, with a combination of one and two bedroom apartments. Recreational facilities are located on ground level and include an in-ground pool, gymnasium and BBQ area.

Sales evidence
			GSA range	Average		Average	Average $/m²
Product type	Number	% mix	(m²)	GSA (m²)	Price range ($)	price ($)	GSA
1 Bed	33	51%	65 – 70	66	380,000 - 445,000	408,455	6,352
2 Bed	32	49%	100 – 130	112	509,000 - 709,000	592,688	5,850
Total / average	65	100%	65 - 130		380,000 - 709,000

Source: Deloitte Corporate Finance

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Table 59: ‘Park’ Newstead QLD

	Project details
	Developer Mirvac Architect N/A Number of units 102 Levels 16 Car spaces N/A Finishes High Design attributes Single Tower Common facilities Gymnasium, concierge, swimming pool. Timing Completed

==> picture [182 x 142] intentionally omitted <==

Project summary

The development is located in Newstead approximately 3 km’s north of the Brisbane CBD. The development is recently completed and comprises 102 residential units and numerous ground floor retail tenancies configured within a 16 level building above one level of basement car parking. Product types range between one, two and three bedroom units. Located within Mirvac’s “Waterfront” project, the units benefit from vast areas of parkland and a man-made lake in addition to river and city views.

Sales evidence
			GSA range	Average		Average
Product type	Number	% mix	(m²)	GSA (m²)	Price range ($)	price ($)	Avg. $/m² GSA
2 Bed	44	94%	97 - 116	110	640,000 - 920,000	745,000	6,720
3 Bed	3	6%	163 - 195	178	1,160,000 - 1,395,000	1,240,000	7,007
Total / average	47	100%	97 - 195		640,000 - 1,395,000

Source: Deloitte Corporate Finance

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Table 60: ‘Southpoint’ South Brisbane, QLD

	Project details Developer Anthony John Group Architect Jackson Teece Number of units 246 residential units, 146 hotel suites Levels 22 Car spaces 291 for use by both residential occupants and hotel guests Finishes High Design attributes Three Towers Common facilities Day spa, concierge, pool. Timing Completion is expected in mid-2015.

	Project summary

The development is located in South Brisbane approximately 1 km south-west of the Brisbane CBD. The development is a large scale mixed use project including a motel, retail, commercial and residential accommodation. The development forms a Transport Orientated Development incorporating the South Bank train station with easy access to the South Eastern Bus way.

We have been advised that 62 of the residential units have been sold. Due to confidentiality reasons, these sales have not been summarised, however are understood to be within the pricing range as detailed below.

Price list for remaining apartments (North Tower)	Price list for remaining apartments (North Tower)	Price list for remaining apartments (North Tower)	Price list for remaining apartments (North Tower)
			GSA range	Average		Average price	Average $/m²
Product type	Number	% mix	(m²)	GSA (m²)	Price range ($)	($)	GSA

			GSA range	Average		Average price	Average $/m²
Product type	Number	% mix	(m²)	GSA (m²)	Price range ($)	($)	GSA
1 Bed	30	27%	50 – 77	52	435,000 - 715,000	499,666	9,542
2 Bed	65	58%	77 – 109	86	540,000 - 925,000	770,000	8,997
3 Bed	17	15%	150 – 318	207	950,000 - 7,500,000	2,911,765	14,039
Total / average	112	100%	50 – 318		435,000 – 7,500,000

Price list (South Tower)

			GSA range	Average		Average price	Average $/m²
Product type	Number	% Mix	(m²)	GSA (m²)	Price range ($)	($)	GSA
1 Bed	60	44%	50 – 55	53	430,000 - 595,000	504,343	9,561
2 Bed	75	56%	79 – 89	84	645,000- 825,000	741,533	8,849
Total / average	135	100%	50 – 89		430,000 - 825,000

Source: Deloitte Corporate Finance

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Pre-Sales at The Milton

In regard to the sales evidence, we consider the unconditional sales within the subject development are considered the best comparison for establishing the gross realisation estimate on the remaining unsold units.

We have been provided with a sales schedule for the development as at 28 January 2014, which records a total of 228 unconditional pre-sales since official marketing commenced in mid-2010, with a further 9 pre-sales in various stages of negotiation. This reflects approximately 75% of stock based on unconditional sales. For the purposes of the assessment, we have adopted the unconditional unit sales at the contracted prices. A summary of the unconditional sales by unit type is detailed as follows:

Table 61: Summary of pre-sales at The Milton

Unit type	Number	Internal area (m 2)	External area (m 2)	GSA (m 2)	Value ($)	$/m 2	net	gross	Average $/Unit
1 Bed	138	7,635	1,557	9,106	65,488,165		8,672	7,189	474,552
2 Bed	60	4,760	1,054	5,814	46,286,274		9,724	7,961	771,438
3 Bed	28	2,719	217	2,936	23,218,474		8,539	7,908	829,231
Dual Key	2	160	16	176	1,670,000	10,438		9,489	835,000
Total /average	228	67	12	79	136,662,913		8,996	7,578	599,399

Source: Deloitte Corporate Finance Note: In some instances 1, 2 and 3 bedroom unit types include a study.

We also note the developer has increased the asking prices on the unsold units relative to the historical averages by between 9 and 14 per cent across product types. We do recognise however, that a number of the remaining units for sale in the development are of higher priced stock which is not uncommon for large scale mixed use developments such as the subject. The higher priced stock is generally sold to owner occupiers who require more certainty before committing to purchase. We anticipate these units will be progressively sold during the construction period.

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Appendix H: Benchmark evidence for gross realisation estimates for The Milton – Retail component

Leasing evidence

The following leasing transactions have been considered in formulating an opinion as to the current rental estimate of the retail tenancies within the subject development.

Table 62: Comparable leasing evidence

				Term
Address	Start Date	NLA (m 2)	Rent ($/m²)	(Years)	Incentive
42 Park Road, Milton	Aug-12	706	583 (Net)	9	0%

A semi-modern two level retail building located on the north-eastern corner of Park Road and McDougall Street. The whole of the building is leased to Mary Ryans bookstore/coffee shop who sub-lease a part of the building. The ground level is 549m2 and the upper level office 157m2. It includes a covered outdoor seating area located to the front and side of the building. The transaction is a lease renewal, with annual rent reviews at 3.5% and a review to market in 2016.

49 Sherwood Road, Toowong Nov-12 75 800 (Gross) 3	0%
A semi-modern building that has been progressively refurbished and upgraded. The building comprises ground level foyer	and retail
accommodation, with 5 upper levels of office space. This is a ground level retail tenancy fitted out as a real estate tenancy	(Harcourts)
that has frontage to Sherwood Road. The lease includes an option for 3 years.
51 Sherwood Road, Toowong Sep-12 88 790 (Gross) 5	0%
An older style retail building that comprises two front retail tenancies and various other tenancies which are accessed by a	centre
arcade which is located within relative close proximity to Toowong Shopping Village. Previously occupied by Laksa Hut Restaurant
which required a full fit-out.
6/48 Sherwood Road, Toowong Apr-13 308 715 (Net) 3	0%

A semi-modern retail/commercial development known as ‘Toowong Place’ which is positioned to the southern corner of Sherwood Road and Jephson Street. The building is configured over two levels. This is a ground level retail tenancy fronting Sherwood Road. The transaction is a lease renewal with a market review at commencement of option.

Confidential, Suburban Location 2012/13 A large-scale mixed use building located in a suburban location within close proximity to a train line. Ground level of the building includes a number of retail tenancies ranging in areas from 35m2 to 162m2. We are aware of the lease particulars and gross rental rates which generally range from between $530/m2 to $930/m2. This has been requested to be kept in confidence at this time.

	Thai Terrace, 151 Baroona Road, Paddington Jun-11 177 661 (Gross) 5 0%
	A modern two level retail/commercial building situated within the popular Rosalie retail precinct in Paddington. Both leases have been structured on a gross rental basis and have annual increases of 4.0%.
	Savoir Faire, Lot 31, 20 Park Road, Milton 16th on Park Bistro & Dessert Café Jun-11 222 + 76 external area 919 (Gross) 5+5+5 0%
	Comprises a strata lot in a semi-modern retail/office complex known as "Savoir Faire". The tenancy has an internal area of 222 square metres and an exclusive use covered outdoor seating area of approximately 76 square metres. The unit has direct exposure to Park Road. Located in the northern end of the complex. The passing rent is $942 per square metre of internal area. The lease has 2.5% annual rent reviews.

Source: Deloitte Corporate Finance

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The preceding rental evidence indicates a rental range of between $583 per square metre net to $800 per square metre gross for tenancy areas ranging between 88 square metres to 308 square metres. In assessing a value for the proposed retail units, we have taken into account the micro-location, unit configuration, likely exposure to passing pedestrian traffic and total occupancy cost based on café/restaurant use. We have also taken into consideration the offers to lease in conjunction with the leasing evidence as detailed above.

Sales evidence

The following sales transactions have been considered in formulating an opinion as to the current market estimate of the retail tenancies within the subject development.

Table 63: Comparable sales evidence

					Initial	Equity
Address	Sale date	Sale price ($)	NLA (m²)	$/m²	yield	yield
Lot 7, 36 Vernon Terrace,	Jun-13	600,000	62	9,677	7.95%	7.95%
Newstead

The property is situated approximately 2.5 radial km’s north-east of the Brisbane CBD. It is located on the western side of Vernon Terrace within ‘London Quarter’ Woolstore. The strata unit is within a strip of retail tenancies along the ground floor facing the street. It has been fitted out to a high standard including an inside and alfresco dining area, bar area, counter area and has a standard commercial kitchen. It also includes a secure car park.

The property was purchased by a private investor. At the date of transaction it had a remaining lease term of 2.25 years with annual rental reviews fixed to 3%. The passing rental was assessed to be within market parameters.

30 Park Road, Milton
Lot 5	Feb-13	350,000	55	6,364	VP	7.07%
Lot 17	Apr-13	270,000	56	5,250	VP	9.33%
Lot 18	Apr-13	270,000	55	4,873	VP	9.16%

The base building is a circa-1990, semi-modern, mixed-use development situated within the near-city suburb of Milton. It comprises three levels of commercial accommodation, single-level retail accommodation situated to the ground level and car parking for 135 vehicles to the basement.

The sold lots comprise ground floor retail component of the complex with direct frontage to Park Road.

5/48 Sherwood Road, Toowong

Lot 5

Aug-13 1,990,000 163 12,209 6.63% -

The unit is situated on the ground floor of a semi modern retail and mixed use commercial complex with two car parks provided. The complex was built circa 1995. The unit has been fully leased to Coffee Club since this time. The unit is situated on the corner of Sherwood Road and Jephson Street with an approximate 10 metre frontage to Sherwood Road. It has a good level of presentation and was fully refurbished mid-2010. The unit comprises an internal cafe/restaurant area of 163 square metres and has an additional outdoor dining area. The tenant is responsible for all outgoings excluding Land Tax.

The unit is fully leased with an eight year lease commencing 23 July 2010 with a five year option thereafter. Fixed annual 4% increases with a market review at option. The unit was sold with a residual lease term of 4.96 years. The passing rent was at $829 net per square metre excluding Land Tax. The passing rent per annum was at $135,073 net per annum and the Land Tax liability was $3,137. The passing rent has been adopted as market rent in the analysis.

Racecourse Road, Ascot

Sep-12 1,470,000 148 9,932 6.78%

The unit is situated on the ground floor of a semi modern retail complex known as Ascot Boulevard. The complex was built circa 1998. The unit is fully leased to Coffee Club and has a good level of presentation. The unit comprises an internal cafe/restaurant area of 148 square metres and an outdoor dining area with an approximate seven metre frontage to Racecourse Road. The tenant is responsible for all outgoings excluding land tax, repair and maintenance, Insurance and sinking fund.

This is a five year lease commencing 5 March 2011 with a five year option thereafter. The unit was sold with a residual lease term of 3.45 years. The passing rent per annum was at $110,823 net per annum. Assessed unrecoverable outgoings equate to $75 per square metre.

Source: Deloitte Corporate Finance

The above sales evidence displays an initial yield range of between 6.63% to 9.16%, an equivalent yield range of 7.07% to 9.33%.The sales reflect a pro rata value range of between $4,873 to $12,209 per square metre of NLA.

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Appendix I: Benchmark evidence for gross realisation estimates for The Milton – Commercial component

Leasing evidence

The following leasing transactions have been considered in formulating an opinion as to the current rental estimate of the commercial office accommodation within the subject development.

Table 64: Comparable leasing evidence

				Term
Address	Start date	NLA (m 2)	Rent ($/m²)	(Years)	Incentive
Various Units, 40-52 McDougall Street, Milton	Nov-13	576	500 (Gross)	3	25%
	Sep-13	413	400 (Gross)	5	0%

Kings Row Office Park is prominently positioned fronting Coronation Drive just 1.5 km’s from Brisbane’s CBD and is conveniently accessed via McDougall Street. Kings Row is well serviced by major forms of public transport with Milton Train Station 250m away, buses stopping regularly along Coronation Drive and neighbouring Milton Road, as well City Cat terminals in either directions positioned along Coronation Drive.

The complex comprises four A Grade office buildings with tenant facilities such as a tennis court, swimming pool, BBQ and conference facilities. A range of restaurants, cafes and bars are located within the immediate precinct.

The first lease is to Forge Group and included 11 secure basement car parks. The second lease is to Corearth Australia Pty Limited and
included 8 secure basement car spaces.
33 Park Road, Milton Sep-13 450 464 (Gross) 2.5 20%
Constructed in 1988, this B-grade office building is situated within the heart of Milton’s commercial precinct on Park Road. It comprises
187 parking bays within two basement levels, ground level retail and office space along with a further three upper levels of office
accommodation. The building has a 2 star NABERS energy rating. It has an average floor plate of 1,500m², a car park to NLA ratio of
1:37. The lease is to Conoco Phillips.
CDOP3, 139 Coronation Drive, Milton May-13 627 515 (Gross) 7 0%
A circa-1997 office building situated within Milton, with good exposure to Coronation Drive and being reasonably proximate to public
transport and retail amenity. It comprises 126 parking bays within one basement level (and lower ground) and five levels of office
accommodation. The building is serviced by three lifts. The building has an average floor plate size of 1,323 square metres and a car
park to NLA ratio of 1:50. The building has a NABERS energy rating of 4 stars. The lease is to Sinopec Oil and Gas Australia.
601 Coronation Drive, Toowong May-13 1,283 495 (Gross) 6 + 3 24%

A circa-2007, modern, A-grade office building situated within the established near-city suburb of Milton. It comprises six levels of office accommodation and three basement levels of car parking. The property has an average floor plate of approximately 1,200 square metres with a central core services layout.

The lease to OAMPS is over the whole of level two. It was negotiated on a six-year term with annual rental reviews to the greater of 4% or CPI, and incentive reported at approximately 24%. The lease included a number of tandem car parking bays.

Source: Deloitte Corporate Finance

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Sales evidence

The following sales transactions have been considered in formulating an opinion as to the current rental estimate of the retail tenancies within the subject development.

Table 65: Comparable sales evidence

		Sale price				Equity
Address	Sale date	($)	NLA (m²)	$/m²	Initial yield	yield
Suite 30, 30 Park Road, Milton	Dec-12	800,000	233	3,433	11.24%	9.71%
Suite 32, 30 Park Road, Milton	Sep-12	756,118	391	1,934	VP	11.27%

Suite 30 is located on the third level and includes commercial office area, three car parks, male and female ablutions and kitchenette facilities. The property was sold mortgagee in possession. At the date of transaction, the property was leased to an average calibre of tenant providing a strong security of income and a remaining lease term of 0.75 years. The passing rental was assessed at parity with market, albeit to the upper end of the market range. The disparity between the passing yield and equivalent yield is attributable to the impending lease expiry.

Suite 32 was purchased vacant (mortgagee in possession). In calculating a market yield, we have assessed a gross market rental of $430/m² and $300 per car parking bay per month.

Level 1, 33 Lytton Road, East May-13 4,600,000 1,068 4,307 9.46% 9.25% Brisbane

The property is located approximately 3.5 km’s by foot from the Brisbane CBD in the suburb of East Brisbane. East Brisbane is a city fringe suburb on the southern side of the Brisbane River. The base site is improved with a mixed use development and comprises retail and commercial accommodation with 22 residential apartments above. It is located along Lytton Road, a main arterial road, with secondary frontages to Geelong and Manilla streets. Access along Lytton Road is restricted to westbound traffic only.

The property comprises two stratum office suites, being the whole of first level, in a mixed use development including basement parking, ground-level retail, first-floor office and two upper levels of residential apartments. The complex is approximately eight years old and the subject strata provides a good standard of suburban office accommodation. It is configured as two tenancies and is accessed via two lifts; one which also services the residential apartments. The property has a car park to lettable area ratio of 1:50.

At the date of contract, the suite was leased to AHL Investments Pty Limited and Place Operations Administration Pty Limited. Passing net income was considered to be within market parameters, albeit, to the upper end of the market range. The suite is fully occupied with a weighted average lease expiry of 4.22 years by income.

1-9, 28 Donkin Street, West End

May-13 5,200,000 1,248 3,331 7.25% 8.78%

The property is located within the established, inner-city suburb of West End, approximately three km’s by road south-west of the Brisbane CBD. The land is improved with a circa-2003, three-level, two-storey, office building, comprising nine strata-titled office suites within the ground and first floors and basement parking for 24 vehicles. The building provides B-grade office accommodation. The property was not inundated during the 2011 flood event, however the basement did have storm water penetration.

The property is currently leased to seven tenants, one on a monthly hold over, one who occupies two suites on a lease which expires at the end of June, and five on executed leases. The property has approximately 310 square metres vacant or 19.86% which does not include the monthly tenancy. At the date of transaction it provided a weighted average lease expiry of 1.46 and 1.17 years by income and area, respectively, to an overall average calibre tenants. Current passing rentals are structured on a gross basis and considered to be at close to parity with market, albeit with some above and some below. We have adopted $370 per square metre per annum, gross face, as the market rental value of the office accommodation within the subject. We have assessed car parking at $200 per bay per month.

Level 1, 183 North Quay, Brisbane

2013

1,550,000 584

2,654 VP 11.32%

The property is located within a nine level commercial building situated in the Brisbane CBD’s north quarter and legal precinct. The office accommodation is situated on level 1 of the building and provides a total floor area of 584m2 overlooking the Brisbane River and South Bank precinct. The office accommodation is based around a side core and is accessed by two passenger lifts and staircase, which service all levels. Male and female amenities and a kitchenette are located within the core providing outdoor breakout space. The floor plate configuration of a side core would easily allow for multiple tenancies to be created, accessed via a common lobby with shared amenities. The premises includes four secure basement car bays.

Source: Deloitte Corporate Finance

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Appendix J: Benchmark evidence for gross realisation estimates for The Milton – Management rights component

The following sales transactions have been considered in formulating an opinion as to the current management rights within the subject development.

Table 66: Comparable sales evidence

Property	Total units letting pool percentage Sale date Total sale price / management unit/s apportionment / management rights apportionment management rights analysis: Rate per total units / Rate per letting pool units Net income / rate per total units / rate per letting pool units Body corporate salary / rate per total units Commencing date / remaining term / module		YPF 1 ROI 2
Lot 201, Madison	308 1-May-12 $3,553,335 $9,824 $682,559 $338,800 1-Jun-14		4.43
Heights, 29 Campbell	307 U/C $527,500 $9,856 $2,216 $1,100 27.10 years	22.6%
Street, Bowen Hills	99.7% $3,025,835 $2,223 accommodation
Comments:	The “Madison Heights Bowen Hills” building upon completion shall comprise a modern, 30 level high-rise, residential apartment building incorporating 308 residential apartments to		28
	residential levels. The building is to be complemented by ground level retail component, above ground and basement car parking facilities which will be accessed from Hazlemount
	Street to the Interests eastern boundary and on site management office/reception facilities and recreational facilities. The management unit is proposed to comprise a two bedroom, two
	bathroom residential apartments, complemented by a large courtyard are on title, and additional car parking, storage and office/reception facilities, held by way of exclusive use rights
	authority or occupational rights authority. The building has recently commenced construction and is proposed to be completed by January 2014. Note: the contract of sale for the
	Management Rights business is based on all 307 residential units being within the letting pool with a clawback provision included. The management unit has on title area of 202 square
	metres.

Proposed Lot 11504	227	2013	$4,655,000	$14,531	$894,476	To be confirmed	4.50
“Westmark Milton”,	230	U/C	$630,000	$17,500	$3,229	accommodation	22.2%
22-36 Railway Terrace,	83%		$4,025,000		$3,889
Milton

Comments: The Westmark Milton complex on completion will comprise a mixed use, high rise apartment complex accommodation 277 residential apartments to 2 towers. It is proposed that 171 residential lots will be included to Tower 1 and 106 residential lots to Tower 2. The complex is to be complemented by basement, on ground and 5 levels of above ground car parking along with single retail level to ground level. The recreational facilities are proposed to be located to Level 6 between the towers and to the rooftop (Level 20) of Tower 1. The property is proposed to be completed by August 2015. Management lot will have an area of 80 square metres.

Note: This sale property has been the subject of a valuation by CBRE Valuations Pty Limited and is analysed with the benefit of a full site inspection of the complex (inclusive of all areas occupied by the manager) and analysis of all financial/occupancy data and legal documentation relating to the caretaking and letting functions.

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Property
Total units
letting pool
percentage
Sale date

Total sale price /
management unit/s
apportionment /
management rights
apportionment
management rights
analysis:
Rate per total units /
Rate per letting pool units
Net income /
rate per total units /
rate per letting pool units
Body corporate salary /
rate per total units
Commencing date /
remaining term /
module
YPF
1
ROI
2

Lot 2107 “The Chelsea
Bowen Hills”,
16 Hamilton Place,
Bowen Hills
195
185
94.9%
16-May-11

$2,719,118
$512,160
$2,206,958
$11,318
$11,930
$536,502
$2,751
$2,900
$214,500
$1,100
3-Jul-05
19.15 years
accommodation
4.11
24.3%

Comments:

The “Chelsea Bowen Hills” complex upon completion shall comprises a two towers one of 14 levels and the other 11 levels plus two basement levels. The complex will incorporate a total of 195 apartments. Ancillary improvements are to include a swimming pool, barbeque and recreation area, gymnasium, meeting room, sky terraces and landscaped gardens. The management unit is to comprise a two bedroom, two bathroom apartment located to the first level within Tower 1. Office/reception is located separately to ground level and held by way of occupational authority in addition to basement storage.

Discussions with the marketing agent confirm that the initial contract offer was submitted at a year’s purchase factor of 4.30 times, based on the stated net income of $536,502, as calculated by the reviewing accountant for the vendor. This calculation did not take into consideration the affect a slightly lower net income would have on the building due to the number of National Rental Affordability Scheme units within the building, and the affect of the guarantee provisions required of the manager which were deemed to be very onerous. The terms and conditions of the guarantee for the National Rental Affordability Scheme units are considered to be the contributing factor to the reduction in the years purchase factor from an initial offer of 4.30 times to 4.11.

Lot 10006 “Hamilton	470	14-Jul-11	$6,972,000	$12,919	$1,265,066	$580,920	Unknown	4.80
Harbour”, 8 Hamilton Road, Hamilton	366 77.9%		$900,000 $6,072,000	$16,590	$2,692 $3,456	$1,236	accommodation	20.8%

Comments:

The Hamilton Harbour complex upon completion shall comprise a new contemporary style, multi building residential tower complex incorporating 258 units to “Harbour 1” and 212 units to “Harbour 2” for a total of 470 residential apartments inclusive of the management unit. The complex is to be complemented The complex is to be complemented by above ground and basement car parking facilities which will be accessed from Harbour Road to the property's south-western boundary and Hercules Street to the Interests south-eastern boundary, and will have on site manager's office/reception facilities and recreational facilities to both buildings. The management unit is proposed to comprise a three bedroom, two bathroom residential apartment complemented by a large courtyard/patio area on title, and additional car parking, storage and office/reception facilities, held by way of exclusive use rights authority or occupational rights authority. 'Harbour 1" (stage 1) and "Harbour 2" (stage 2) of the complex are currently under construction and are proposed to be completed by December 2011 and March 2012 respectively. Proposed Lot 10002 has a title lot area of 165 square metres.

Lot 201 “Trilogy	121	9-Mar-12	$2,900,000	$18,678	$437,877	$143,100	18-Dec-06	5.16
Residences”, 340 Boundary Street, Spring Hill	97 80.2%		$640,000 $2,260,000	$23,229	$3,619 $4,514	$1,183	19.79 years accommodation	19.4%

Comments:

"Trilogy Residences" comprises a modern residential apartment complex accommodating 121 apartments over 3 buildings. Tower A comprises o total of 37 apartments over 5 levels, Tower B comprises a total of 30 apartments over 6 levels and Tower C comprises a total of 54 apartments over 10 levels. In addition there are 2 levels of basement car parking facilities which are accessed from Hope Street to the property's western boundary and a private laneway from the south-eastern boundary.

Ancillary improvements include a 25 metre healed swimming pool, spa pool, barbeque and recreation area, common area toilets, Zen garden, gymnasium, extensive landscaping, full boundary fencing and onsite management.

The management unit comprises a 2 bedroom, 2 bathroom unit with office/reception attached and on title. In addition the management unit has use of I car space and a number of storage areas which are held by way of exclusive use agreement or occupational authority.

The property was constructed circa 2006. We note that the final purchase price of the management unit and rights were altered after valuation. We consider the unit price of $640,000 to be above market levels and the analysed years purchase factor of the management rights business to be below market levels.

Deloitte : PBD Developments Limited – Independent expert’s report and Financial Services Guide

Page 84

Property
Total units
letting pool
percentage
Sale date

Lot 112, “Soho” &
“Greenwich on
Cordelia”
51 Peel Street & 14
Cordelia Street, West
121
64
52.9%
24-Dec-12

$1,700,000
$90,000
$1,610,000
$13,306
$25,156
$313,126
$2,588
$4,893
$147,636
$1,220
Soho: 2012
Greenwich: 2005
5.14
19.4%

End

Comments:

The Soho and Greenwich on Cordelia complexes comprise modern medium rise residential apartment complexes incorporating a combination of residential and commercial strata titled units. The complexes are complemented by on ground and basement car parking facilities, recreational facilities and landscaped features. The Soho complex is additionally benefited by an onsite management office/reception facility with no such facility provided within the Greenwich on Cordelia complex.

The management lot to the Soho complex comprises a double car parking space wherein 1 space has been converted to a caged storage area with the second space being used for the provision of a single car parking space.

The complexes were completed in 2005.

Source: CBRE, Deloitte Corporate Finance

Notes:

1. Years purchase factor -YPF

2. Return on Investment - ROI

Deloitte : PBD Developments Limited – Independent expert’s report and Financial Services Guide

Page 85

Appendix K: Sources of information

In preparing this report we have had access to the following principal sources of information:

Draft Notice of Meeting
annual reports for PBD for the year ending 30 June 2012 and 30 June 2013
executed project delivery deed for the Yang Land
executed development agreement for The Milton
executed infrastructure agreement (Milton railway station project) for The Milton
executed instrument of agreement (Construction contract) for The Milton
executed management rights sale agreement for The Milton
access to a data room set up by Aveo Group specifically for the purpose of the Proposed Acquisitions
company website for PBD and Aveo Group
websites for applicable statutory bodies
publicly available information on comparable companies and market transactions published by Thompson research, Capital IQ, SDC Platinum and Mergermarket
IBIS company and industry reports
other publicly available information, media releases and brokers reports on PBD, comparable companies and the residential property sectors.

In addition, we have had discussions and correspondence with certain directors and executives of:

Aveo Group, including:
Gary Kordic, Executive General Manager, Developments
Andrew Hall, Executive General Manager, Capital Transactions and Partnerships
Justin Lorenz, General Manager Corporate Finance
Okan Kender, Senior Analyst
PBD, including:
David Hunt, Director
Jally Lin, Chief Executive Officer
Hai-Young Lu, Assistant to the Chief Executive Officer and Legal Counsel

in relation to the above information and to current operations and prospects.

Deloitte : PBD Developments Limited – Independent expert’s report and Financial Services Guide

Page 86

Appendix L: Qualifications, declarations and consents

The report has been prepared at the request of the Independent Directors of PBD and is to be included in the Notice of Meeting to be given to Non-associated shareholders for approval of the Proposed Acquisitions in accordance with the ASX Listing Rules. It represents solely the expression by Deloitte Corporate Finance of its opinion as to whether the Proposed Acquisitions are fair and reasonable to Non-Associated Shareholders. Accordingly, it has been prepared only for the benefit of Non-Associated Shareholders in their assessment of the Proposed Acquisitions and should not be used for any other purpose. Neither Deloitte Corporate Finance nor Deloitte Touche Tohmatsu, nor any member or employee thereof, undertakes responsibility to any person, other than the Non-Associated Shareholders and PBD, in respect of this report, including for any errors or omissions however caused. Further, recipients of this report should be aware that it has been prepared without taking account of their individual objectives, financial situation or needs. Accordingly, each recipient should consider these factors before acting on the Proposed Acquisition.

This engagement has been conducted in accordance with professional standard APES 225 Valuation Services issued by the APESB and the Australia and New Zealand Valuation and Property Standards.

The opinion of Deloitte Corporate Finance is based on economic, market and other conditions prevailing at the date of this report. Such conditions can change significantly over relatively short periods of time.

Statements and opinions contained in this report are given in good faith but, in the preparation of this report, Deloitte Corporate Finance has relied upon the completeness of the information provided by PBD and Aveo Group, their officers, employees, agents or advisors which Deloitte Corporate Finance believes, on reasonable grounds, to be reliable, complete and not misleading. Deloitte Corporate Finance does not imply, nor should it be construed, that it has carried out any form of audit or verification on the information and records supplied to us.

In recognition that Deloitte Corporate Finance may rely on information obtained through public sources and/or provided by PBD and Aveo Group, their officers, employees, agents or advisors, PBD has agreed that it will not make any claim against Deloitte Corporate Finance to recover any loss or damage which PBD may suffer as a result of that reliance and that it will indemnify Deloitte Corporate Finance against any liability that arises out of either Deloitte Corporate Finance’s reliance on the information provided by PBD, its officers, employees, agents or advisors or the failure by PBD, its officers, employees, agents or advisors to provide Deloitte Corporate Finance with any material information relating to the Proposed Acquisitions.

We are not lawyers, quantity surveyors, environmental consultants, surveyors or engineers and therefore we do not warrant on anything that calls on expertise of such professionals.

Deloitte Corporate Finance holds the appropriate Australian Financial Services Licence (AFSL) to issue this report and is owned by the Australian Partnership Deloitte Touche Tohmatsu. The employees of Deloitte Corporate Finance principally involved in the preparation of this report were Tapan Parekh, B.Bus, M.Com, CA, F.Fin; Robin Polson, B.Comm, G. Dip. App Fin, FINSIA, Damian Winterburn, B. App. Sci, Cameron Chatwood, AAPI, MRICS, MPIA, FFin, David England, B.Bus, C.Com and David Wessels, B.Compt, B.Com (Hons), CA. Tapan and Robin are Directors, Damian, Cameron and David England are Associate Directors and David Wessels is a Manager of Deloitte Corporate Finance. They have many years experience in the provision of corporate financial advice, including specific advice on valuations, real estate development project advisory, mergers and acquisitions, as well as the preparation of expert reports.

Deloitte : PBD Developments Limited – Independent expert’s report and Financial Services Guide

Page 87

Consent to being named in disclosure document

Deloitte Corporate Finance Pty Limited (ACN 003 833 127) of 225 George Street, Sydney, NSW, 2000 acknowledges that:

PBD proposes to issue a disclosure document in respect of the Proposed Acquisitions (the Notice of Meeting)
the Notice of Meeting will be issued in hard copy and be available in electronic format
it has previously received a copy of the draft Notice of Meeting for review
it is named in the Notice of Meeting as the ‘independent expert’ and the Notice of Meeting includes its independent expert’s report as Annexure A of the Notice of Meeting.

On the basis that the Notice of Meeting is consistent in all material respects with the draft Notice of Meeting received, Deloitte Corporate Finance Pty Limited consents to it being named in the Notice of Meeting in the form and context in which it is so named, to the inclusion of its independent expert’s report as Annexure A of the Notice of Meeting and to all references to its independent expert’s report in the form and context in which they are included, whether the Notice of Meeting is issued in hard copy or electronic format or both.

Deloitte Corporate Finance Pty Limited has not authorised or caused the issue of the Notice of Meeting and takes no responsibility for any part of the Notice of Meeting, other than any references to its name and the independent expert’s report as included as Annexure A of the Notice of Meeting.

Deloitte : PBD Developments Limited – Independent expert’s report and Financial Services Guide

Page 88

About Deloitte

Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee, and its network of member firms, each of which is a legally separate and independent entity. Please see www.deloitte.com/au/about for a detailed description of the legal structure of Deloitte Touche Tohmatsu Limited and its member firms.

Deloitte provides audit, tax, consulting, and financial advisory services to public and private clients spanning multiple industries. With a globally connected network of member firms in more than 150 countries, Deloitte brings world-class capabilities and high-quality service to clients, delivering the insights they need to address their most complex business challenges. Deloitte has in the region of 200,000 professionals, all committed to becoming the standard of excellence.

About Deloitte Australia

In Australia, the member firm is the Australian partnership of Deloitte Touche Tohmatsu. As one of Australia’s leading professional services firms, Deloitte Touche Tohmatsu and its affiliates provide audit, tax, consulting, and financial advisory services through approximately 6,000 people across the country. Focused on the creation of value and growth, and known as an employer of choice for innovative human resources programs, we are dedicated to helping our clients and our people excel. For more information, please visit Deloitte’s web site at www.deloitte.com.au. Confidential – this document and the information contained in it are confidential and should not be used or disclosed in any way without our prior consent.

Annexure B – Terms and Conditions of Options

The terms and conditions of each Option are as follows:

Each Option entitles the holder to subscribe for one Share upon exercise of the Option and payment of the Exercise Price (defined below).
Each Option is exercisable at any time after the share price reaches $0.03 for a consideration of $0.02 per Option payable in full on exercise of the Option ( Exercise Price ).
Subject to paragraph 23, the Options automatically expire at 5.00 pm on 31 March 2016 ( Expiry Date ).
The Options will not be quoted on ASX.
The Company must give the holder of each Option a certificate or holding statement stating:
(a) the number of Options issued to each holder;
(b) the Exercise Price of the Options; and
(c) the date of issue of the Options.
Holders may exercise the Options at any time up to the Expiry Date. Any Option not exercised, automatically expires on the Expiry Date.
Subject to the provisions of the Company’s Securities Trading Policy, Options may only be exercised during the hours of 8.30am to 5.00pm ( Business Hours ) by the delivery to the registered office of the Company or the Share Registry of a notice in writing stating the intention of the holder to:
(a) exercise all or a specified number of the Options; and
(b) pay the Exercise Price in full for the exercise of each such Option.
A notice in writing received outside of Business Hours will be deemed received at the next opening of Business Hours.
The exercise notice must be accompanied by the certificate or holding statement for the options being exercised and a cheque made payable to the Company for the Exercise Price for the Options being exercised.
The Options will be deemed to have been exercised on the date the exercise notice is received or deemed to be received by the Company or the Share Registry.
The Company will allot the Shares to which a holder is entitled following exercise of Options and deliver a holding statement with respect to such Shares within the timeframe required by the Listing Rules.
The exercise of only some Options will not affect the rights of the holder to the balance of the Options held by them.
If the holder of the Options exercises less than the total number of Options registered in the holder’s name:
(a) the holder of the Options must surrender its option certificate, if one has been issued by the Company; and
(b) the Company must cancel the certificate and issue the holder of the Options a new certificate or holding statement stating the remaining number of Options held by the holder and stating the information set out above.
Options will not confer an entitlement to receive dividends declared and paid by the Company, nor an entitlement to vote at general meetings of the Company unless the holder of the Options has exercised the Options before the record date for determining these entitlements and participates as a result of holding Shares.
All Shares issued on exercise of an Option will:
(a) rank equally in all respects (including, without limitation, rights relating to dividends) with other issued Shares;
(b) be issued credited as fully paid;
(c) be duly authorised and issued by all necessary corporate action; and

16 | P a g e

(d) be allotted and issued free from all liens, charges and encumbrances whether known about or not, including statutory and other pre-emption rights and any transfer restrictions.
The Company will apply to ASX Limited for official quotation of the Shares issued upon exercise of Options within the time period required by the Listing Rules.
The Options are not transferable.
A holder of Options does not have the right to participate in bonus issues or new issues of securities offered to Shareholders until Shares are allotted to the holder pursuant to the exercise of the Options.
In the event of a reorganisation (including, without limitation, consolidation, sub-division, reduction or return) of the capital of the Company, the rights of the holders of Options (including, without limitation, the number of Options to which the Optionholder is entitled to and the Exercise Price) will be changed (as appropriate) in accordance with the Listing Rules applying to a reorganisation of capital at the time of the reorganisation.
If the Company makes a pro-rata issue (other than a bonus issue) to existing Shareholders and no Share has been issued in respect of the Option before the record date for determining entitlements to the issue, the Exercise Price of each Option will be reduced in the manner permitted by the Listing Rules applying at the time of the pro-rata issue.
If the Company makes a bonus issue to existing Shareholders and no Share has been issued in respect of that Option before the record date for determining entitlements to the issue, then the number of Shares over which that Option is exercisable will be increased in the manner permitted by the Listing Rules applying at the time of the bonus issue.
The Company is entitled to treat the registered holder of an Option as the absolute holder of that Option and is not bound to recognise any equitable or other claim to, or interest in, that Option on the part of any person other than the registered holder, except as ordered by a court of competent jurisdiction or as required by statute.
Notwithstanding paragraph 3, if:
(a) a takeover bid within the meaning of the Corporations Act is made for the Shares and the bidder becomes entitled to compulsorily acquire all of the Shares, any Options not exercised by the date which is seven days after the date the bidder became so entitled shall immediately lapse; or
(b) a court orders a meeting to be held in relation to a proposed scheme of arrangement in relation to the Company the effect of which may be that a person will have a relevant interest in at least 90% of the Shares and Shareholders pass the resolution by the requisite majorities, any Options not exercised by the date which is seven days after the date of the meeting shall immediately lapse.

17 | P a g e

PBD Developments Limited ABN 12 009 134 114

Lodge your vote:

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
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Online:

www.investorvote.com.au



By Mail:

Computershare Investor Services Pty Limited GPO Box 242 Melbourne Victoria 3001 Australia

T 000001 000 PBD MR SAM SAMPLE FLAT 123 123 SAMPLE STREET THE SAMPLE HILL SAMPLE ESTATE SAMPLEVILLE VIC 3030

Alternatively you can fax your form to (within Australia) 1800 783 447 (outside Australia) +61 3 9473 2555

For Intermediary Online subscribers only (custodians) www.intermediaryonline.com

For all enquiries call:

(within Australia) 1300 850 505 (outside Australia) +61 3 9415 4000

Proxy Form

Vote online



Go to www.investorvote.com.au or scan the QR Code with your mobile device. Follow the instructions on the secure website to vote.

Your access information that you will need to vote:

Control Number: 999999 SRN/HIN: I9999999999 PIN: 99999 PLEASE NOTE: For security reasons it is important that you keep your SRN/HIN confidential.

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For your vote to be effective it must be received by 10:00 am (Sydney time) Monday, 31 March 2014

How to Vote on Items of Business

All your securities will be voted in accordance with your directions.

Appointment of Proxy

Voting 100% of your holding: Direct your proxy how to vote by marking one of the boxes opposite each item of business. If you do not mark a box your proxy may vote as they choose. If you mark more than one box on an item your vote will be invalid on that item.

Voting a portion of your holding: Indicate a portion of your voting rights by inserting the percentage or number of securities you wish to vote in the For, Against or Abstain box or boxes. The sum of the votes cast must not exceed your voting entitlement or 100%.

Appointing a second proxy: You are entitled to appoint up to two proxies to attend the meeting and vote on a poll. If you appoint two proxies you must specify the percentage of votes or number of securities for each proxy, otherwise each proxy may exercise half of the votes. When appointing a second proxy write both names and the percentage of votes or number of securities for each in Step 1 overleaf.

A proxy need not be a securityholder of the Company.

Signing Instructions for Postal Forms

Individual: Where the holding is in one name, the securityholder must sign.

Joint Holding: Where the holding is in more than one name, all of the securityholders should sign.

Power of Attorney: If you have not already lodged the Power of Attorney with the registry, please attach a certified photocopy of the Power of Attorney to this form when you return it.

Companies: Where the company has a Sole Director who is also the Sole Company Secretary, this form must be signed by that person. If the company (pursuant to section 204A of the Corporations Act 2001) does not have a Company Secretary, a Sole Director can also sign alone. Otherwise this form must be signed by a Director jointly with either another Director or a Company Secretary. Please sign in the appropriate place to indicate the office held. Delete titles as applicable.

Attending the Meeting

Bring this form to assist registration. If a representative of a corporate securityholder or proxy is to attend the meeting you will need to provide the appropriate “Certificate of Appointment of Corporate Representative” prior to admission. A form of the certificate may be obtained from Computershare or online at www.investorcentre.com under the information tab, "Downloadable Forms".

Comments & Questions: If you have any comments or questions for the company, please write them on a separate sheet of paper and return with this form.

GO ONLINE TO VOTE,  or turn over to complete the form

Samples/000001/000001/i

MR SAM SAMPLE FLAT 123 123 SAMPLE STREET THE SAMPLE HILL SAMPLE ESTATE SAMPLEVILLE VIC 3030

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Change of address. If incorrect, mark this box and make the correction in the space to the left. Securityholders sponsored by a broker (reference number commences with ’ X ’) should advise your broker of any changes.



I 9999999999 I ND

Proxy Form

Appoint a Proxy to Vote on Your Behalf

I/We being a member/s of PBD Developments Limited hereby appoint

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the Chairman OR of the Meeting

Please mark to indicate your directions

XX

 PLEASE NOTE: Leave this box blank if you have selected the Chairman of the Meeting. Do not insert your own name(s).

or failing the individual or body corporate named, or if no individual or body corporate is named, the Chairman of the Meeting, as my/our proxy to act generally at the meeting on my/our behalf and to vote in accordance with the following directions (or if no directions have been given, and to the extent permitted by law, as the proxy sees fit) at the General Meeting of PBD Developments Limited to be held at Intercontinental Hotel, 117 Macquarie Street, Sydney NSW 2000 on Wednesday, 2 April 2014 at 10.00am (Sydney time) and at any adjournment or postponement of that meeting.

Important for Items 3, 4 and 5: If the Chairman of the Meeting is your proxy and you have not directed him/her how to vote on Items 3, 4 and 5 below, please mark the box in this section. If you do not mark this box and you have not directed your proxy how to vote, the Chairman of the Meeting will not cast your votes on Items 3, 4 and 5 and your votes will not be counted in computing the required majority if a poll is called on this Item. The Chairman of the Meeting intends to vote undirected proxies in favour of items 3, 4 and 5 of business.

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I/We acknowledge that the Chairman of the Meeting may exercise my proxy even if he/she has an interest in the outcome of that Item and that votes cast by him/her, other than as proxy holder, would be disregarded because of that interest.

Items of Business  PLEASE NOTE: If you mark the Abstain box for an item, you are directing your proxy not to vote on your behalf on a show of hands or a poll and your votes will not be counted in computing the required majority.

1 Approval to acquire the right to participate in the development of Yang Land (Point Cook, Victoria)
2 Approval to acquire the right to participate in the development of The Milton (Milton, Queensland)
3 Approval for the issue of options to Mr David Hunt
4 Approval for the issue of options to Ms Cerena Fu
5 Approval for the issue of options to Mr Marcus Seow

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The Chairman of the Meeting intends to vote undirected proxies in favour of each item of business.

SIGN Signature of Securityholder(s) This section must be completed.

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Individual or Securityholder 1 Securityholder 2 Securityholder 3
Sole Director and Sole Company Secretary Director Director/Company Secretary
Contact
Contact Daytime
Name Telephone Date / /
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9 9 9 9 9 9 A

P B D

AI assistant

TIAN AN AUSTRALIA LIMITED — Proxy Solicitation & Information Statement 2014

65920_rns_2014-02-27_4089c143-e180-40de-9e07-f4310ef8a9e6.pdf

ACN 009 134 114

NOTICE OF GENERAL MEETING

Date and time of meeting

Place of meeting

Important notice

NOTICE OF GENERAL MEETING 2 APRIL 2014

PBD Developments Limited ACN 009 134 114 (Company)

Business

Resolution 1 - Approval to acquire the right to participate in the development of Yang Land

Independent Expert's Report

Resolution 2 - Approval to acquire the right to participate in the development of The Milton

Independent Expert's Report

Resolutions 1 and 2 - Voting exclusion statement

You may be liable for breach of the voting restrictions in the Corporations Act if you cast a vote that the Company disregards.

Resolution 3 – Approval for the issue of options to Mr David Hunt

Resolution 4 – Approval for the issue of options to Ms Cerena Fu

Resolution 5 – Approval for the issue of options to Mr Marcus Seow

Resolutions 3 to 5 - Voting exclusion statement

Important information concerning proxy votes on Remuneration related to Resolutions 3 to 5

Resolution 1 – Approval to acquire the right to participate in the development of Yang Land

Conditions Precedent

Development

FKPRD Works

Sale of Lots to End Purchasers

Put Option

Termination

Approval requirements

Directors’ recommendation

Resolution 2 – Approval to acquire the right to participate in the development of The Milton

Conditions

Development

The Project

Interest of Participant Unsecured

Approval requirements

Directors’ recommendation

Resolutions 3 to 5: Issue of Options to Non-Executive Directors

Approval Requirements

ASX Listing Rules

- Corporations Act Chapter 2E

Corporations Act - Section 195

Directors' recommendation

Voting entitlements

Voting in person

Voting by proxy

Corporate Representatives

Financial Services Guide What is a Financial Services Guide?

What financial services are we licensed to provide?

Our general financial product advice

How are we and all employees remunerated?

Associations and relationships

What should you do if you have a complaint?

What compensation arrangements do we have?

1 February 2013

Independent expert’s report

Introduction

Purpose of the report

Basis of evaluation

Definition of value

Summary and conclusion

The Proposed Acquisitions are fair

Valuation of the Interests

The Yang Land

The Milton

Valuation of the consideration

The Proposed Acquisitions are reasonable

Advantages of the Proposed Acquisition

PBD may be able to achieve benefits above the market value of the Interests

Aveo Group will remain actively involved in The Milton and in the Point Cook area

Change in cash flow profile through the acquisition of the Interests

Disadvantages of the Proposed Acquisition

PBD may not be in a position to acquire other assets

Conclusion on reasonableness

Opinion

Contents

1 Overview of the Proposed Acquisitions

1.1 Summary

1.1.1 The Yang Land

TIAN AN AUSTRALIA LIMITED Proxy Solicitation & Information Statement 2014