Qld Affordable Housing Consortium Ltd and the DNA Partnerships

1. Qld Affordable Housing Consortium Ltd and the DNA Partnerships BANK FORUM – NRAS INVESTMENT www.dnapartnerships.com.au www.qahc.asn.au

2. Examples Of Approved Stock 14 x 3 Bedroom Townhouses • 5 schools within 2 km, closest 300 m • Bus service located 300 m to property • 11 km from Brisbane CBD

3. Key areas for discussion today Asset Selection Valuation Methodology Effective Demand & Income Profiles Tenancy Selection& Management Risk Head Lease & Non Entity Joint Venture NRAS Product& Scale Investors: Individuals and Institutions . Logistics and aggregation Fully Managed Investment

4. Quality in design and production 39 x 1-3 Bedroom Apartments • 6 schools within 2 km, closest 500 m • Train service located 1.1 km from property • 1.5 km from Caboolture CBD

5. NRAS – A Supply-Side intervention • Supply shortfall of 200,000 dwellings by 2013 [NHSC -2009] • NRAS is an industry policy response to drive supply of at least 50,000 new rental homes • Tax Incentives of $8,672 [indexed] per dwelling for 10 years stimulates new investment • NRAS improves affordability for working families by providing a minimum 20% discount to market rents for the 10 year NRAS period. [25.1% in our Model]

6. Traditional stock within a larger developments 28 x 4 Bedroom Houses • 12 schools within 6 km, closest 2 km • Bus service located 3.3 km to property • 3.4 km from Caboolture CBD

7. NRAS Market designs and type Market built Normal Market valuation Privately owned 10 years in NRAS Market based rent – discounted and indexed Private rental tenants with improved tenant choice Diversified portfolio and integrated delivery within mainstream developments and infill sites NRAS is a market product

8. New Growth Corridors close to jobs 31 x 4 Bedroom Houses • 8 schools within 10 km, closest 2.3 km • Train service located 2.5 m walking distance • 29.4 km from Gold Coast CBD

9. Stock Selection: Type, Location and Proportions Locations are characterised by Strong demand and rental stress Good existing infrastructure, transport, services and jobs [Capital Cities / Growth Corridors / strong regional cities] NRAS stock is market stock. It can be in master-planned communities, green-field or infill sites Typically around 15 – 25% in house and land integrated in master-planned or green-field sites 50% in infill, or in some cases a full apartment block or townhouse development if integrated in the wider area Housing types reflects household, demographic and market supply factors: Around 50% target for 1 and 2 bed dwellings and around 50% target for 3 and 4 bed dwellings

10. Universal Design Standards Apartments for retirees and also workers [particularly retail and hospitality] Prospective Image • 241 Apartments in Total • 150 Available to NRAS • Studio • 1 Bedroom • 2 Bedroom Google Map 20k • 1.8km from School • 0.1km from Transport • 0.1km from the water

11. NRAS – Who are the tenants 1.5 million eligible households underpins strong demand Key workers: Childcare workers, firefighters, nurses and hospital support workers, teachers, public transport workers, local council workers, community workers. Many workers on award wages. Part time and casual workers Over 55’s on low to moderate incomes Households that are discriminated in the rental market NRAS can assist economic outcomes eg hospitality and retail workers in tourist areas Single Adult $41,514 2 Adults $57,391 Couple + I child $71,159 Single + 1 Child $57,432 Couple + 2 Children $84,927 Single + 2 Children $71,200 Couple + 3 Children $96,695 Households that are NRAS tenants can earn 25% more than these limits and still retain eligibility, promoting neighbourhood stability and orderly re-letting

12. The WesternGrowth Corridor 30 x 4 Bedroom Houses • 5 schools within 6 km, closest 2.4 km • Bus service located 3 km from property • 6.9 km from Ipswich CBD

13. What rents are considered affordable Under the Consortium Model Investors receive the full $8,672 per year tax free income and provide a 25% discount in rents under ATO Charitable requirements By mapping rents and income levels, we can demonstrates the Scheme’s is clearly targeted to working families. Discounted rents are simply not affordable to those on social incomes. These are some examples of market and affordable rents under NRAS $35,000 Single person Income = $250 market rent is $187 discount rent $45,000 Household Income = $300 market rent is $225 discount rent $55,000 Income = $400 market rent is $300 discount rent $75,000 Income = $530 market rent is $397 discount rent $85,000 Income = $600 market rent is $450 discount rent $95,000 Income = $685 market rent is $515 discount rent

14. Regional Centre’s with good job prospects 6 x 3 Bedroom Townhouses 9 x 3 & 4 Bedroom Houses • 8 schools within 15 km, closest 1.2 km • Train service located 1.4 km from property • 17 km from Gladstone CBD

15. Why we selected a Headlease model • The Headlease is the NEJV – a more acceptable instrument to ‘Mom and Dad’ investors and a vehicle that allows individual ownership of an NRAS Dwelling on Title • Provides national consistency to ensure standards and quality management across 15,000 dwellings and it works across a variety of investment mechanisms • Provides transparency and compliance for tracking NRAS entitlements • It provides stability in letting arrangements that assists in creating stronger communities • And…it has a good track record • Defence Housing Australia use long leases and • 5,700 dwellings are leased from private owners in NSW per year since 1983 and 2,000 dwellings leased from private owners in Qld per year since 1991

16. Affordable housing where people want to live 31 x 1 & 2 Bedroom Over 55’s Apartments • Services and recreation on site • Bus service located 125 m walking distance • 12 km from Maroochydore CBD

17. DNA PartnershipsAn institutional strength aggregation product platform for supporting a legislated Commonwealth initiative – The National Rental Affordability Scheme (NRAS) Governed by DNA Mutual Ltd and administered by Integration Management and Communication Services Pty Ltd

18. Popular Town Houses 22 x 3 Bedroom Townhouses • 6 schools within 2 km, closest 600 m • Bus service located 800 m to property • 18 km from Brisbane CBD

19. NRAS ASSET TRANSACTION PROCESS Sales to open market Unitised Trust Sales to open market INSTO DNA NRAS Property sold to market AFSL Self Regulated INSTO DEVELOPERS Investment Committee ACCEPTED NRX listing For sale Wholesale Distribution Regulator Institutional NRAS INSTO Real-estate Performance Transaction Satisfies Approval Criteria Set by Investment Committee Research AFSL Valuation Research Eligibility AFSL Direct $400k

20. Smaller dwellings to meet diverse needs- right in the heart of the town 36 x 2 Bedroom Apartments • 13 schools within 4 km, closest 500 m • Bus service located 700 m from property • 700 m from Caboolture CBD

21. Managing NRAS investment A fully managed investment Legislation, Regulation and Compliance Investment through financial instrument or real property Owners Pack with 10 year Headlease and Property Management Agreement Secure income stream[NRAS does not facilitate guaranteed income] Tailor-made Group Insurance based on risk profiling – provides cash-flow payment in certain circumstances ATO private ruling on the flow through of the Tax Incentive to Investors Performance based management with 2 weeks vacancy cover in any lease period Buying and selling Creating a strong diverse market of buyers and sellers Normal Bank repossession provisions Owner Right to sell out of NRAS Option to sell to another investor with NRAS intact Potential to provide ‘rent to buy’ option for NRAS tenants Getting the basics right Good locations and associated infrastructure & diverse portfolio Strong and diverse tenant pool & tenants financially incentivised Standardised performance based property and tenancy management, with a focus on creating strong, mixed income and stable neighbourhoods

22. On Transport Corridors 14 x 3 Bedroom Townhouses • 5 schools within 2 km, closest 500 m • Bus service located 280 m to property • 7 km from Brisbane CBD

23. Frequently Asked Questions • Normal market valuations • Normal lending criteria on asset class • Bank powers & repossession rights as normal • LMI – Genworth will insure ‘Mom and Dad’ investors and take NRAS income into account • A National approach and institutional strength product design by way of the Head Lease & Secure Income Stream Delivery • Access to NRAS market through DNA aggregation • Owners can enter and leave the Scheme as a ‘market’ • ATO has a clear position on QAHC Model and investor Tax-Free entitlements

24. Flinders StMelbourne Prospective Image • 263 Apartments in Total • 70 Available to NRAS • 1 Bedroom • 2 Bedroom Google Map 20k • 1.1km from School • 0.3km from Transport • 1.1km from Flagstaff Gardens

25. Current Status • 911 Approvals • 2,067 dwellings submitted February 2010. • 15,000 dwellings across Australia to go through our assessment process [ January to August 2010] • 3 sites sold and tenanted • 300+ dwellings under contracts for sale • Bank retail investment funding expected $3BN. • Institution investment expected $3 BN • Pilot institutional program with institutions • Financial products to deliver liquidity- PDS

26. Well designed inner-city infill 24 x 2 Bedroom Apartments • 6 schools within 2 km, closest 200 m • Bus service located 300 m to property • 1.2 km from Mackay CBD