Disclosures

The Responsible Entity maintains a number of written policies that various aspects of the Fund’s operations. To view the relevant policy, please click on the links below.

 

Product Disclosure Statement

You can find a copy of the Product Disclosure Statement by clicking here.

 

Property Profiles

Click here for a list of properties owned by the Fund.

 

Financial Reports

Interested parties are able to download the following financial reports:

Distributions

The following distributions have been paid:

  • A 5 cent distribution per unit was declared on 30 June 2018
  • A 5 cent distribution per unit was declared on 31 December 2017
  • A 5 cent distribution per unit was declared on 30 June 2017
  • A 4.8 cent distribution per unit was declared on 31 December 2016
  • A 4.8 cent distribution per unit was declared on 30 June 2016
  • A 4 cent distribution per unit was declared on 31 December 2015
  • A 4 cent distribution per unit was declared on 30 June 2015
  • A 4 cent distribution per unit was declared on 31st December 2014
  • A 4 cent distribution per unit was declared on 1 July 2014
  • A 4 cent distribution per unit was declared on 1 January 2014
  • A special distribution of $103,279 was declared on 31 October 2012

The Fund’s distributable income will primarily be sourced from income it receives from its interests in the REIT, which in turn will primarily be sourced from the rental income the REIT receives on its property assets. At times the distribution may include captial gains and return of capital.

When the REIT sells a property asset, some capital may not be returned by the REIT to the Fund. This will be determined by the REIT at the relevant time. For at least the first three years of the Fund’s life, it is the Responsible Entity’s intention that any capital gains made by the REIT will be reinvested in further property assets.

 

Portfolio Diversification Disclosures

 

Performance Disclosures

Click here to view the performance disclosures.

 

Policy Disclosures

The Responsible Entity maintains a number of written policies…

Gearing Policy

LAST REVIEW: NOVEMBER 2016

Gearing magnifies the effect of gains and losses on an investment. The gearing ratio indicates the extent to which a scheme’s assets are funded by external liabilities. A higher gearing ratio means greater magnification of gains and losses and generally greater volatility compared to a lower gearing ratio.

The gearing ratio is calculated as follows:

Gearing ratio = Total interest bearing liabilities ÷ Total assets

The gearing ratio will be based on liabilities disclosed in the Fund’s annual financial statements.

The Fund will not directly own property, and therefore, will not borrow for the purposes of financing the acquisition of a property. Neither will it borrow for the purposes of gearing its investment in the REIT.

When undertaking property acquisitions, the Responsible Entity will permit the REIT to borrow up to a maximum of 60% of a property’s value (including the value of any improvements and capitalised costs) to finance (or refinance) the acquisition, provided that the portfolio’s gearing ratio will not exceed 40% of its fair market value. That is, if a property is acquired for $1,000,000 and improvement and transaction costs are $100,000 and the fair value of the property carried in the REIT’s accounts is $1,110,000, then the REIT’s expected borrowing level will not be higher than $660,000 for that property and the portfolio gearing ratio will be 40% or less.

The maximum borrowing limit of 40% does not include any money advanced by the Fund to the REIT characterised as debt.

The liabilities and assets used to calculate the gearing ratio will be based on the Fund’s latest financial statements. The latest financial statements would usually be the latest audited or reviewed financial statements, except where the Responsible Entity is aware of material changes since those statements. If members’ contributions (other than borrowings from members) are classified as liabilities in the financial statements, they will be excluded from liabilities in calculating the gearing ratio.

Due to the Fund’s significant exposure to off-balance sheet financing (ie financing within the REIT), the Responsible Entity will also calculate a look-through gearing ratio for the Fund using the formula:

Look through gearing ratio =
Total interest bearing liabilities + proportionate share of interest bearing liabilities of the Fund’s underlying investments / Total Fund assets (excluding investments) + proportionate share of assets of the Fund’s underlying investments

For information on borrowings, the details can be viewed on each property profile where relevant.

 

Interest Cover Policy

LAST REVIEW: NOVEMBER 2016

The interest cover ratio indicates an unlisted property scheme’s ability to meet interest payments from earnings, where:

Interest cover ratio = ( EBITDA* – unrealised gains + unrealised losses) / Interest expense

* EBITDA (year to date earnings before interest, tax, depreciation and amortisation)

The EBITDA (earnings before interest expense, tax, depreciation and amortisation) and interest expense figures used to calculate the interest cover ratio should be consistent with those disclosed in the scheme’s latest financial statements. The latest financial statements will usually be the latest audited or reviewed financial statements, except when the Responsible Entity is aware of material changes since those statements.

The interest cover ratio is a measure of the risk associated with the Fund’s borrowings and the sustainability of borrowings. A fund with a low interest cover ratio only needs a small reduction in earnings (or a small increase in interest rates or other expenses) to be unable to meet its interest payments. Interest cover is also useful for investors when comparing a fund’s relative risks and returns.

As the Fund does not intend to borrow directly, the interest cover ratio will be measured at the REIT’s level, by assessing the REIT’s ability to meet its interest payments out of earnings.

Once the property portfolio is fully invested, the Responsible Entity’s will maintain an interest cover ratio of more than 2.

 

Interest Capitalisation Policy

LAST REVIEW: NOVEMBER 2016

The Responsible Entity will ensure that any interest payments due on any borrowings within the REIT will not be capitalised and will be paid out of free cash flow.

 

Unit Pricing Policy

LAST REVIEW: NOVEMBER 2016

Under the constitution (Constitution) of (the Fund), PCL may issue units in the Fund at any time at an issue price per unit equal to the “Issue Price”. Similarly, if PCL permits a member to redeem its units, the redemption price specified in the Constitution is the “Redemption Price”.

Determination of Issue Price and Redemption Price involves the quantification of a number of amounts. Some of these amounts require PCL to exercise a discretion, in that it must use its independent judgement of the value of certain things.

This document explains how Issue Price and Redemption Price is determined and, where PCL must exercise a discretion in assigning a value to an amount which goes to determining Net Asset Value, explains PCL’s policy as to how its discretion will be exercised.

 

Issue Price

The Issue Price up until the Minimum Subscription Amount is met is $1 per unit.

At any other time, the Issue Price is defined as:

(Net Asset Value ÷ Number of Units on Issue) + any relevant Transaction Charge

 

Redemption Price

If any redemption is allowed up until the Minimum Subscription Amount is met, it will be at $1 per unit.

At any other time, the Redemption Price is defined as:

(Net Asset Value ÷ Number of Units on Issue) – any relevant Transaction Charge

The number of Units on issue is a known amount which does not involve an exercise of discretion by PCL. However, Net Asset Value does in part require PCL to exercise its discretion. The nature of these discretionary judgements and the policies that PCL will apply in exercising them are described below.

 

Determination of Net Asset Value

The Constitution defines Net Asset Value to be the value of the Fund’s consolidated assets calculated according to Australian Accounting Standards, less the liabilities of the Fund and any Distributable Amount payable but not paid to Unit Holders on the day on which the Net Asset Value is determined.

Determining Net Asset Value therefore involves an exercise of discretion by PCL, both in order to determine the value of the Fund’s assets and to assign a value to those liabilities which are of an uncertain amount at the time of calculation.
PCL’s policy as to how these discretions will be exercised is set out below.

 

Valuing the Fund’s property

The Fund’s assets will be valued according to its valuation policy.

 

Determining the value of uncertain liabilities

From time to time, certain of the Trust’s liabilities may be incapable of being given certain values and therefore PCL must exercise discretion in assigning a value to them for the purpose of determining Net Asset Value.

Where this is the case, PCL will use the amount of such liabilities shown in the most recent published accounts of the Trust, unless such amount is not shown in such account or PCL reasonably believes that it does not represent the true value of the relevant liability. In these circumstances will determine the amount of such liability in accordance with usual market practice.

 

Documentation of exercises of discretion

On each occasion on which PCL determines Net Asset Value, it will prepare and retain a document showing how Net Asset Value was determined, including the value assigned to each asset and liability of the Trust and, if the determination of such value involved an exercise of discretion by PCL, how that value was determined.

 

Valuation Policy

LAST REVIEW: May 2017

Outline

In accordance with the requirements of RG 46.45, the responsible entity maintains and complies with a written valuation policy that requires:

  1. a valuer to:
    1. be registered or licensed in the relevant state, territory or overseas jurisdiction in which the property is located (where a registration or licensing regime exists), or otherwise be a member of an appropriate professional body in that jurisdiction; and
    2. be independent;
  2. to follow procedures for dealing with any conflicts of interest
  3. rotation and diversity of valuers;
  4. valuations to be obtained in accordance with a set timetable; and
  5. for each property, an independent valuation to be obtained:
    1. before the property is purchased:
      1.  for a development property, on an ‘as is’ and ‘as if complete’ basis; and
      2. for all other property, on an ‘as is’ basis; and
    2. within two months after the directors form a view that there is a likelihood that there has been a material change in the value of the property.

Clarification

Unless otherwise stated, the term Responsible Entity includes Plantation Capital Ltd, any fund that it manages (including fund subsidiaries), directors and employees.

Policy

The Responsible Entity has adopted the following valuation policy:

Registration & Qualification

Ref: RG46.45(a)(i)

The person or firm engaged to complete the valuation (i.e. the valuer or appraiser) must be registered or licensed in the relevant jurisdiction in which the property is located (where a registration or licensing regime exists), or otherwise be a member of an appropriate professional body in that jurisdiction and must have the experience and expertise in the location and type of property being valued

Evidence Requirement

Evidence of current registration must be obtained to placed on file that confirms the registration particulars and qualifications of the valuer.

Independence

Ref: RG46.45 (a)(ii)

The person or firm engaged to complete the valuation (i.e. the valuer or appraiser) shall both be, and perceived to be, independent from the responsible entity, including any subsidiary of the responsible entity.

Evidence Requirement

Evidence of independence in the form a declaration to accompany the valuation or appraisal stating words to the effect of the valuer / appraiser:

  1. does not influence the operations or financial policies of the responsible entity
  2. does not participate, or appear to participate, in the business or professional activities of the responsible entity
  3. has no financial arrangement with to receive from the responsible entity, or pay to the responsible entity, a commission or similar payment in relation to any business matter other than the agreed fixed price quote to complete the appraisal
  4. has reached his/her own conclusions about the appraised value without any coercion or undue influence from the responsible entity
  5. is not a shareholder or investor in the responsible entity

Conflicts Of Interest

Ref: RG46.45(b)

Should a situation where a conflict of interest arise between the responsible entity and the appraiser then the conflict of interest shall be disclosed in writing and shall be referred to the Compliance Committee to decide how best to act.

Valuation Timetable

Ref: RG46.45(e)(i)(B) & (ii)

An independent appraisal shall be obtained prior to the property being purchased. After purchase:

  1. A restricted appraisal shall be completed every six months
  2. A full re-appraisal at least every three years; or
  3. Within two months after the directors form a view that there is a likelihood that there has been a material change in the value of a property.

Rotation & Diversity

Ref: RG46.45(c)

The appraiser shall be rotated on a basis deemed appropriate in the circumstances to ensure a robust, professional and independent appraisal is obtained. No appraiser should conduct more than two consecutive full re-appraisals on the three-year rotation cycle.

Valuation Basis

Ref: AASB13

Properties are to be valued on the basis of Fair Market Value pursuant to the meaning attributed under AASB 13.

 

Related Party Transactions Policy

LAST REVIEW: NOVEMBER 2016

 

Requirements Under the Applicable Law

ASIC Regulatory Guide 181 (“RG 181”) provides guidelines for adequately managing conflicts of interest, on controlling and avoiding conflicts of interest and on disclosing conflicts of interest.

RG 181.28 provides that to control conflicts of interest a licensee must:

  • successfully identify the conflicts of interest relating to their business;
  • assess and evaluate those conflicts; and
  • decide upon, and implement, an appropriate response to those conflicts.

RG 181 outlines a number of strategies to deal with any conflict should it arise and stresses that for conflicts management arrangements to be adequate, they must be well documented in the form of a policy (which may form part of the licensee’s compliance procedures or manual).

Part 5C.7 of the Corporations Act 2001 (the “Act”) seeks to apply Chapter 2E (Related Party Transactions) to a Registered Scheme. This section of the Act is designed to protect the interest of the scheme’s members as a whole, by requiring member approval for giving financial benefits to the Responsible Entity or its related parties that come out of scheme property or that could endanger those interests.

 

PCL’s Approach to Related Party Transactions

Conflict of interests may arise if related party transactions are not properly identified, assessed and managed.

PCL maintains a ‘Related Parties Transactions Register’ that identifies parties that are considered ‘related’ for this purpose and are therefore not to enter into transactions together without appropriate approvals, if such approvals apply in the particular instance.

All related party contracts or agreements must clearly state the capacity of all contracting parties. Any material contract entered into with related parties requires prior Board approval.

Where a related party transaction takes place with the appropriate approvals, its details must be entered into a Related Party Transactions Register, to be maintained by the Compliance Manager.

Where a related party transaction takes place without the appropriate approvals, a report is to be prepared for the Compliance Committee and the Board to consider and take appropriate action.

All audited financial statements shall disclose related party transactions.

Details of any related party transactions can be found in the financial reports section by clicking here.

PCL believes that the financial benefits provided to its related parties from scheme property will generally not require member approval under the exception afforded under section 210 of Part2 E.1 of the Act provided the nature of the benefits being provided to the related parties are disclosed in the Fund’s Product Disclosure Statement and the transaction is on an arm’s length basis at commercial rates.

 

Distribution Policy

LAST REVIEW: NOVEMBER 2016

The Responsible Entity expects that the Fund will commence making distributions within a year of being fully invested (ie. within a year of having invested all the funds raised to meet the Minimum Subscription Amount).

The Responsible Entity will determine the Fund’s distributable income for each six-monthly distribution period. Investors on the register as at the last day of the relevant distribution period will be entitled to the distribution for that period. Investors may also reinvest all of their distributions to acquire additional Units in the Fund using the Unit price that applied as at the date of the relevant distribution (via the Fund’s Distribution Reinvestment Policy (DRP)).

Distributions are expected to be paid within 60 days of the end of each relevant distribution period. Cash distributions will be made electronically to the bank account investors nominate. When making their application, if an Investor does not provide clear instructions on their preference for receiving distributions or does not provide valid bank account details to receive their distribution, their full distribution entitlement will be automatically reinvested in additional Units in the Fund.

The Fund’s distributable income will primarily be sourced from income it receives from its interests in the REIT, which in turn will primarily be sourced from the rental income the REIT receives on its property assets.

When the REIT sells a property asset, some capital may not be returned by the REIT to the Fund. This will be determined by the REIT at the relevant time. For at least the first three years of the Fund’s life, it is the Responsible Entity’s intention that any capital gains made by the REIT will be reinvested in further property assets.

 

Privacy Policy

LAST REVIEW: NOVEMBER 2016

 

Rights to privacy

Plantation Capital Limited (PCL) ABN 65 133 678 029 understands the importance of protecting an individual’s right to privacy. This statement sets out how Plantation Capital Limited aims to protect the privacy of your personal information, your rights in relation to your personal information managed by PCL and the way PCL collects, uses and discloses your personal information.

In handling your personal information, PCL will comply with the Privacy Act 1988 (Cth) (“Privacy Act”) and with the ten National Privacy Principles in the Privacy Act. This policy statement may be updated from time to time.

 

What kinds of personal information does PCL collect?

Personal information is information that identifies an individual. During the provision of PCL’s services, PCL may collect your personal information.

Generally, the kinds of personal information PCL collects are your name, address, telephone number, email address, and where relevant, driver’s licence details, date of birth, passport details, tax file number, bank account details as well as any other information that may be required under Australian anti-money laundering legislation for identification and other purposes. In some circumstances, PCL may also hold other personal information provided by you.

 

How does PCL collect personal information?

Generally, PCL collects your personal information directly from you, by requesting that you provide your personal information when you fill out an application form. There may be other occasions when PCL collects your personal information from you or from other sources such as from an information services provider or a publicly maintained record.

 

Why does PCL need your personal information?

PCL collects your personal information for the purposes of:

  • providing services associated with PCL’s managed investment scheme;
  • accounting, billing and other internal administrative purposes;
  • identifying and informing you of products and services that may be of interest to you;
  • to comply with its legal requirements under the Anti-Money Laundering Legislation; and
  • any other legal requirements.

You are under no obligation to provide your personal information to PCL. However, without certain information from you, PCL may not be able to provide its services to you.

 

Who does PCL disclose your personal information to?

PCL discloses your personal information for the purpose for which PCL collects it. That is, generally, PCL will only disclose your personal information for a purpose related to its retail services or its services associated with PCL’s management investment scheme. This may include disclosing your personal information to third parties engaged to perform administrative or other services. Such disclosure is always on a confidential basis. PCL may also disclose your personal information with your consent or if disclosure is required by law.

 

Security of your personal information

PCL takes all reasonable steps to ensure that the personal information it holds is protected against misuse, loss, unauthorised access, modification or disclosure. PCL holds personal information in both hard copy and electronic forms in secure databases on secure premises, accessible only by authorised staff.

 

Can you access the personal information that PCL holds about you?

Under the Privacy Act, you have a right to access your personal information that is collected and held by PCL. If at any time you would like to access or change the personal information PCL holds about you, or you would like more information on PCL’s approach to privacy, please tell PCL.

To obtain access to your personal information, you will have to provide proof of identity. This is necessary to ensure that personal information is provided only to the correct individuals and that the privacy of others is protected.

PCL will take all reasonable steps to provide access to your personal information within 30 days from your request. In less complex cases PCL will attempt to provide information within 14 days.

If providing you with such access requires a detailed retrieval of your personal information, a fee may be charged for the cost of such retrieval and supply of information.

 

How to contact us

For further information or enquiries regarding your personal information, please contact PCL’s Compliance Manager at admin@passiveincomefund.com or on +61 3 8892 3800 during business hours.

 

Privacy complaints

Please direct all privacy complaints to PCL’s Compliance Manager. At all times, privacy complaints:

  • will be treated seriously;
  • will be dealt with promptly;
  • will be dealt with in a confidential manner; and
  • will not effect your existing obligations or effect the commercial arrangements between you and PCL.

The Compliance Manager will commence an investigation into your complaint. You will be informed of the outcome of your complaint following the completion of the investigation. In the event you are dissatisfied with the outcome of your complaint, you may refer the complaint to the Australian Financial Complaints Authority.

 

Frequently Asked Questions

Click here to find a list of frequently asked questions.

General Advice Warning: This information is of a general nature only and does not take into account your objectives, financial situation or needs. You should consider the Product Disclosure Statement (dated 4 July 2018) issued by Plantation Capital Limited ACN 133 678 029 AFSL 339481 in deciding whether to acquire an interest in the Passive Income (USA Commercial Property) Fund. PropertyInvesting.com Pty Ltd is an authorised representative of Plantation Capital Limited ABN 98 096 059 353, AFSL 339481. Past performance is not a guarantee of future performance.