Remember that the information below is not meant to be in any way a complete analysis of the opportunity, but to give potential Investors an overview of some of the issues that may be important. Interested investors should examine further information. Also please refer to the terms and conditions in your subscription agreement.

1. Proposal Title/Headline

Highly profitable & secured, niche residential real estate development,

2. Business Summary

Experienced real estate developers require equity investment for niche market regional residential house & land subdivision. The developers have successfully undertaken similiar projects in selected regional areas where there has also been a large housing demand. Investment is secured by second mortgage, where the first mortgage is on a low Loan to Valuation Ratio (LVR). Based on current projections and pre-sale commitments the project provides the opportunity for Investors to earn in excess of 75% return within a 15-18 month timeframe. Colliers Jardine have prepared a valuation of the project, which will be made available to interested investors. The project is located in Griffith NSW, Australia's fastest growing regional centre with outstanding growth and an accute housing crisis. The large local employers have been very supportive of the project as it assists them in maintaining and recruiting a stable workforce. There is virtually no competition within this market and demand currently exceeds supply, as evidenced by the almost complete sell out in the first weekend. The developers' ability to provide a totally vertically integrated program encompassing, finance, land, house and grant applications from the one source, makes the process very easy for the purchasers. This is specifically targetting first home buyers who qualify for the Federal Govt's $14,000 grant. The Marketing campaign has only been operating 1 week and already we have precommitments for 79 of the 83 lots with a further 18 waitlisted. We would anticipate that the majority of the sales would be completed before drawdown of the Investors' funds, making for a great confidence and comfort factor for any intending investor. The management of this company have a successful track record in these type of projects. The risks will be minimised by implementing a strategy that is geared to fixed time & price contracts with all contractors involved, alleviating the potential risks associated with cost overruns and expensive time delays.

Updates

3. Estimate of Market Size and Growth Potential

This is a project specific development & comprises 83 residential house & land packages at an average sales price of $194,000 per package, specifically targeted to the first home owner. As there is no other direct competitor in this market the market share is irrelevant. As at 8/10/01 we had 79 of the lots precommitted (value approx $14.5ml) This resulted from the first major marketing campaign.

4. Market Demand

The project is located in the township of Griffith NSW, which is known as the centre of Australia's food bowl. The region is extremely bouyant and is the fastest growing regional centre in Australia. The town has virtually zero unemployment and has a critical housing shortage. Our development has specifically targeted the first home buyer to take advantage of the Federal Govt's $14,000 and there is virtually no competing product in this market area. Local large employers are assisting us as they are keen to create stability for their staff We have 79 sales that are pre-committed and contracts issued with a further 18 on wait list, which was achieved over one weekend.

5. Competitive Advantage

Lower Sale Price
Lower Cost Price
Volume of Scale

Due to the developer packaging 83 house & land parcels this will allow for substantial cost savings and enormous economies of scale in the project. By standardising the methodology in construction and utilising innovative processes this will allow additional savings and enhance the aesthetics of the project. As this is the only residential land subdivision of its type & size in the region, it positions the developer with the only large scale land development approved and now able to be marketed in the region.

6. Market Distribution

Due to the substantial market demand for this type of product and the substantial marketing campaign being created, the developer is very confident of the ability of both local and national agents to meet the sales timetable (see 13 above). Marketing has already commenced and several large employers have assisted with our promotional activities to their staff to help in overcoming the acute housing shortages in the area. As a result of these local initiatives combined with an intense marketing campaign a week prior to the launch 79 sales out of 83 available have already been pre-committed and contracts issued, with a further 18 buyers on wait list after the first weekend of the launch.

7. Management

The management team have extensive expertise and excellent credibility in the type of project being undertaken. The Managing Director of the project has had over 24 years experience in the building & construction fields from small house & land packages through to substantial commercial projects. He has lived and worked in the region for the last ten years. The Marketing Director has had hands on experience in the construction and selling of several residential housing projects. He excels in the development of strategies for project management and has marketing skills that have achieved exceptional outcomes.In addition the Marketing Director has been one of the founders of a new real estate group that is revolutionising the marketing of special projects and domestic real estate sales. The Financial Director is a fully qualified accountant and will provide financial accounts on a monthly basis throughout the project.

8. Technology

The core technology is encapsulated in the construction methodology that will produce a more cost effective and timely house and land package. In addition this system adds considerably to the project's aesthetics.

9. Product Development

The construction methodology has been successfully used in other NSW regional towns by the developer.

10. Scalability

The developer's methodology excels under volume and improves the outcomes in terms of both profitability and time. The current capital raising is project specific and the capital & profit will be returned to shareholders on or before the conclusion of the project estimated to be December 2002.

11. Intellectual Property in SME's Business

Copyright
Trade secrets

There is no realistic way of protecting in the medium to long term the methodology created by the developer and engineers. We do however have a significant head start in the primary market, way ahead of any impending competitor.

12. Barriers to Entry

1. The main barrier to potential competition is that any major player, such as A V Jennings or Masterton, have no interest in this regional market. 2. A further significant barrier to likely competition is the unavailability of large regional raw land approved for residential development. 3. Local builders are unable to package the vertically integrated product and therefore they concentrate on specific design & construct options. There is no potential or likely project competitor, that could organise themselves in the required time. In addition the Govt Grant expires shortly which severely limits any potential competitor. In any event the project is all but sold out, which makes the issue largly irrevelant.

13. Milestones

1. The major milestone is the issue of a construction certificate from the local council, which is about to be made. Drawdown of the Investors funds would not be made untill the certificate is issued. 2. The second milestone is the sale of the 83 house & land packages. Based on the developers pre-committments this appears to have been achieved in the first weekend. 3. The third milestone will be the completion of the subdivision and the settlement of the individual 83 land sales. This should be completed within approx. 4-6 months. 4. The fourth milestone will be the completion of the construction of houses on the land. The majority of these will be completed and settled by Dec 2002.

14. Risks

1. The main risk is securing "Off the Plan" sales. This is being addressed by the developer utilising strong local agent representation together with the expertise of the company's Marketing Director. With the continuing substantial pre-committments, this risk appears to have been overcome based on the successful launch, resulting in a virtual sell out. 2. Another potential risk is the financial collapse of the construction company, ( which is associated with the company's Managing Director), however as all payments are made on a strict drawdown basis and all home construction contracts are insured, this is not likely to adversely affect the project even if it did happen.

15. Company Valuation

No formal valuation of the company has been undertaken, however Colliers Jardine have prepared an extensive and indepth valuation of the project including realisation valuations, construction costs and gross margins of the project.

16. Abridged Profit & Loss

 

The company is newly incorporated for this specific project and has not previously traded. The project comprises essentially 2 stages as follows: 1) The completion of the development of the subdivision, wherein 83 individual titles will be registered. At this time the purchasers will settle the land component, allowing the developer to extinguish its 1st mortgage debt and provide a surplus of approx. $2.5 mill. The developer will require retention of approx. $1 mill to fund its cashflow requirements on the construction stage and will allow for the partial distribution to shareholders. 2) The second stage involves the progressive construction of 83 houses within the development and will be largly funded by progressive drawdowns from the purchasers lenders.

17. Balance Sheet

18. Accumulated Sales since business started

Sales
$14,500,000

Years Established

19. Is the business solvent

yes

Solvency History

20. No. of Employees

2 to 5

21. Shareholding % to be issued to new investor for investing.

30%

22. CAPstart Matching Product

  C1

23. Business Stage

Startup of business

24. Role the investor would play

Non Executive Director

25. Main Location

NSW