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Abacus Diversified Income Fund II | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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What is the objective of Abacus Diversified Income Fund II? Abacus Diversified Income Fund II seeks to provide investors
with an attractive and reliable source of investment income
and the return of their capital plus the potential for capital
growth. This Fund may suit investors who:
Fund summary
What are the Fund’s key features? Attractive income yield Minimum income return of 9% pa over the life of the investment for new investors - underwritten by Abacus Property Group. Annual CPI indexation Each financial year commencing July 2011, the distribution on new units will be automatically adjusted for the percentage change in the Consumer Price Index between the commencement of that financial year and June 2010. Tax effective 100% tax deferral estimated on distributions in FY2011. Capital protection Regardless of the changes in the asset values underpinning the investment, you will as a minimum receive a return of your capital at the end of the investment term - underwritten by Abacus Property Group. Experienced investment manager Abacus Funds Management Limited is the responsible entity of the Fund and is a member of Abacus Property Group, a diversified property business that is a member of the S&P/ASX 200 A-REIT index, with over 13 years experience as a retail property funds manager. No annual management fees Abacus Funds Management Limited will not charge a management fee until investors have received a minimum 10% capital gain on their original investment. How is the capital value underwritten? The Fund currently owns 25 commercial investment properties which underpin the net asset value of the Fund (the asset composition may change over time). If the net sales proceeds from the sale of the Fund or the Fund’s property portfolio at the end of the investment term are insufficient to return your capital invested, Abacus Property Group will make up the shortfall in the first instance by setting off the principal of the Abacus Loan Facility (which is subordinated to unitholder capital) and any residual shortfall will be satisfied either in cash or Abacus Property Group stapled securities, or a combination of the two, at unitholder discretion. The Abacus Loan Facility has a principal drawn amount of approximately $48m and provides collateral to meet the underwriting commitments if required. The underwritten capital return provided by Abacus Property Group is only available after 30 June 2016. As this is a fixed term investment investors are unable to benefit from the underwritten capital return before this date. Who is underwriting the Fund returns? Abacus Property Group, an S&P/ASX200 listed entity, is underwriting the Fund’s distributions and capital return. Abacus Property Group specialises in investing in property based assets and has approximately $2 billion of assets under management. Since 1996, Abacus Property Group has established more than 35 investment funds and raised over $1.1 billion in equity from retail and institutional investors. The financial strength of Abacus Property Group supports the Fund by providing loan facilities and underwriting the distributions and capital return. Details of the financial position of Abacus Property Group and recent announcements can be found on its website at www.abacusproperty.com.au What is the potential for capital growth? There are many variables that may impact on the net asset value at the winding up of the Fund after June 2016 and thus the extent, if any, to which Abacus Property Group may have to satisfy its obligations under the underwritten capital return or unitholders may be entitled to capital growth. Rental growth over the term of the Fund may contribute to growth in the value of the Fund’s property portfolio. Other factors that may affect the value of the Fund’s property portfolio include capitalisation rates, occupancy, property expenses and change of use. The greater the income growth rates achieved and the lower the capitalisation rate on sale of the properties, the lower the reliance will be on the underwritten capital return and the greater the likelihood of capital growth.
In November 2009 approximately half of the Fund’s debt was extended until August 2012 and in December 2010 the Fund’s second facility was extended with the same lender until September 2013. The Fund has hedged all of the interest on its bank borrowings from a floating rate to a fixed rate. Property portfolio at 31 December 2010
Approximately 44% of the property portfolio was externally valued in December 2010, 5% was valued in September 2010 and 47% was externally valued in June 2010. One property subject to option was last externally valued in December 2009. Properties may be sold during the term of the Fund, and additional properties may be acquired. Disclaimer:The information in this document is general only. Before a person makes an investment decision on the basis of this information, they should determine for themselves or obtain professional advice as to whether this information is appropriate for their particular needs, investment objectives and financial situation. An offer document for Abacus Diversified Income Fund II dated 24 December 2009 and Supplementary PDS is available above. Anyone considering an investment in the Abacus Diversified Income Fund II should consider the PDS and the Supplementary PDS in deciding whether to acquire Abacus Diversified Income Fund II Units. Applications can only be accepted for this investment on the application form attached to the PDS. Issuer: Abacus Funds Management Limited ABN 66 007 415 590; AFSL: 227819; ARSN: 116 429 844.
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