becton diversified disclosure property fund statement · 12/8/2005 · page 04 becton diversified...

BectonDiversifiedProperty Fund

Product DisclosureStatement

ARSN 117 509 921

Important notice 021. Investment overview 032. About the Fund 073. Investment strategy 114. Investment considerations and risks 195. The Manager 226. Fees and expenses 25

7. Taxation 308. Additional information 329. Glossary of terms 3610. Instructions to applicants 38Application form 41Directory 45

Contents

Front cover photos (clockwise from top left): 245-247 BalcattaRoad Balcatta WA; Lot 7, 32 Gauge Circuit Canning Vale WA;92 Robinson Avenue Belmont WA; 33 Allara Street CanberraACT; and Southlands Boulevarde Shopping Centre WA. Above: Freedom Homemaker Centre Capalaba QLD. All photos are of assets of the Becton Sector Trusts.

The Becton Diversified Property Fund offers Investors access to a quality,diversified, direct property investmentdesigned to provide a regular quarterlyincome stream and potential capital growth.Prospective Investors wanting to participate in this Offer need to complete the following steps:

1. Read Read this PDS in full.

2. Consider Consider all the risk factors and other information in this PDS in light of your ownparticular investment needs, objectives and circumstances.

3. Consult Consult your financial or other professional adviser before deciding to invest in theFund. If you have any questions on what you need to do, then you should consultyour adviser or the Manager.

4. Complete Complete the application form set out at the back of this PDS in accordance with the instructions set out in section 10.

Applications must be received for at least $10,000 worth of Units. Applications for more than $10,000 in Units must be in increments of $1,000.

Payment for Units can be by cheque or electronic funds transfer as per theinstructions set out in section 10.

5. Mail The completed application form and cheque should then be mailed or delivered to:

Becton Investment Management LimitedLevel 7, 470 St Kilda Road, Melbourne VIC 3004.

Those investing in the Fund via an Administration Service must complete the applicationform for that Administration Service and lodge it with a cheque as instructed by the operatorof the Administration Service.

Becton Diversified Property Fund Product Disclosure Statement

This Product Disclosure Statement (“PDS”) relates to the Becton Diversified Property Fund ARSN 117 509 921 (the Fund) and is dated 10 February 2006. The offer of Units under this PDS is by BectonInvestment Management Limited ABN 62 090 939 192(the Manager) as responsible entity for the Fund.

The custodian of the Fund at the date of this PDS is Sandhurst Trustees Limited ABN 16 004 030 737 (the Custodian). The Custodian is not the issuer of this PDS, and makes no representations as to, andtakes no responsibility for, the accuracy or truth of anystatement in, or omission from, any part of this PDS.

Neither the Manager, the Becton Group, the Custodiannor their directors, members or associates guaranteesthe performance of the Fund, the repayment of capitalor any particular rate of capital or income return. TheManager has not authorised any person to give anyinformation or to make any representation in connectionwith the Offer which is not contained in this PDS. Nosuch information or representation may be relied uponas having been authorised by the Manager inconnection with the Offer.

Information contained in this PDS (and anysupplementary PDS) may change from time to time. If the change will be materially adverse then, in accordance with the Corporations Act 2001, theManager will issue a supplementary PDS. However, if the change will not be materially adverse to the Offer,then the Manager will not issue a supplementary PDS.Updated information will be continually available fromthe Manager’s website at www.becton.com.au andupon request the Manager will provide a paper copy of any updated information free of charge.

This PDS may be accessed at www.becton.com.au. If a prospective Investor has received this PDSelectronically, then the Manager will provide a papercopy free of charge upon request. This PDS can only be used by prospective Investors who receive itelectronically or otherwise in Australia.

This PDS should be read in its entirety. ProspectiveInvestors should note the PDS has not been preparedwith the objectives, financial situation or particularneeds of any particular person or class of persons in mind. Before making an investment decision,prospective Investors should consider whether theinvestment is appropriate to their needs, objectives and circumstances. The Manager recommends thatprospective Investors obtain independent legal andfinancial advice.

The Manager authorises this PDS for use by personsinvesting through an investor directed portfolio service,master fund, wrap account or custodial service(collectively referred to as an ‘Administration Service’ in this PDS). When investing in the Fund through anAdministration Service, this PDS should be read inconjunction with the current disclosure document forthe relevant Administration Service and applicationsmust be made on the application form supplied by theAdministration Service operator. The current disclosuredocument for the relevant Administration Service maybe obtained from the relevant service operator.

Definitions of certain terms used in this PDS appear in the Glossary of Terms in section 9.

Photographs in this PDS are of assets owned by theBecton Sector Trusts. By investing in the Becton SectorTrusts, the Fund will acquire an indirect interest in theseassets along with each other investor in the BectonSector Trusts.

Important notice

Investmentoverview1


Overview Refer to section

Fund The Fund is an unlisted property trust that the Manager intends will 2.1remain open for investment.

Issuer Becton Investment Management Limited (the Manager) is the responsible 5.1entity of the Fund and issuer of the Units.

Return Objective To provide Investors with regular tax effective income. The Manager 2.3is targeting Total Returns for the Fund which exceed both the following benchmarks:

• 3 percentage points over the risk free rate (that is, the 10 year Government bond rate), and

• the Mercer Unlisted Property Funds Index (pre tax).

Please note however the past performance of these benchmarks is no guide to the Fund’s future performance. The return objectives are not guaranteed by any person and are not financial forecasts.

Fund Investments To invest in a diversified portfolio of predominantly property based 3.1investments. Investments will primarily be:

• Direct Property, which will comprise investments in Unlisted Property Trusts (as either equity or debt) and the acquisition of real property located in Australia and New Zealand

• Listed property trusts (LPTs)

• Equities (property investment companies, property income funds and share funds where the dominant source of income relates to property)

• Social infrastructure

• Cash

The Offer Prospective Investors are invited to acquire Units in the Fund. 2.4

Amount to For as long as proceeds raised under this PDS can be invested in 2.1be Raised accordance with the Fund’s investment criteria then the Fund will remain

open for new investment. As such, there is no maximum amount to be raised under this PDS.

However, the initial target equity raising is $25 million. These proceeds will be used to meet the Fund’s establishment costs and make investments in accordance with the Fund’s target asset allocation. The initial allocation to Unlisted Property Trusts will be applied towards wholesale investments in the Becton Industrial Property Trust, the Becton Retail Property Trust and the Becton Office Property Trust.


Minimum The minimum amount which must be raised under the PDS is $500,000. 2.5Subscription The Manager has agreed that it will not be reimbursed for the costs incurred

in establishing the Fund until the Fund has $5 million in gross assets.

Unit Price The Unit Price is $1.00 per Unit up to and including the day the initial units 2.7are issued following minimum subscription being reached. Thereafter, each Unit will be issued at a price determined in accordance with the Constitution and based upon the net value of the Fund’s assets. The Unit Price will be determined on a daily basis.

Minimum $10,000. 2.4Investment

Additional In increments of $1,000. 2.4Investments

Issue of Units Units will generally be issued to successful applicants within three 2.4business days of acceptance of a valid application.

Distributions Income distributions will be made to Investors within 30 days of the end 2.9of each September, December, March and June. All distributions will be made via electronic funds transfer.

Distribution Investors may choose to reinvest their distributions. 2.10Reinvestment

Risks There are risks associated with an investment in the Fund. 4.1

Entry Fee Nil. There are no entry fees payable by Investors. 6.1

Ongoing Fees Management and other fees are payable by the Fund. 6.1

Indirect Capped at 1.20% of the Fund’s total average net assets for the first three 6.3Cost Ratio years from the date of this PDS. However, the Manager expects the

Indirect Cost Ratio (ICR) for the Fund to be 0.85% on the Initial Portfolio. The Manager will not charge Investors its management fee in relation to the Fund’s investment in the Becton Sector Trusts nor for investments in LPTs where this is managed externally.



Limited Liquidity The Fund will not initially be liquid (as that term is defined in the 2.6Corporations Act). As there is currently no secondary market for Units, Investors should consider their investment long-term and illiquid.

While the Fund is not liquid, the Manager intends to make quarterly offers to allow Investors to redeem Units. The first such offer is expected to be made in June 2006. It is the Manager’s intention that approximately 20% of the net assets of the Fund will be made available in any 12 month period to fund withdrawal offers.

The Manager will monitor the liquidity of the Fund and should the Fund become liquid (at any point in the future), then all current and prospective Investors will be advised. Where the Fund is liquid, Investors may request a redemption of their investment at any time. The Manager intends to satisfy such redemption requests within 14 days. In certain circumstancesredemptions may take longer to process.

Buy/sell spread To ensure all Investors are treated equitably, the Manager has 2.8determined that a buy spread of 2.5% will apply to all applications to reflect the Manager’s best estimate of the average cost of acquiring the Fund’s investments.

The Manager expects under normal circumstances the withdrawal of Units will be funded from the issue of new Units and as such the sell spread is expected to be nil.

Borrowings The long term portfolio gearing is targeted to be at or below a 60% 2.11loan to value ratio. Where gearing is maintained in investment vehicles in which the Fund invests, then the Manager will perform a “look through” calculation to determine the Fund’s total gearing exposure.

No Cooling While the Fund is not liquid there is no “cooling off” period in relation 8.6off Period to applications. This means once an application for Units is accepted

by the Manager, it may not be withdrawn by the applicant.

Eligibility for Superannuation funds may invest in the Fund, subject to the investment 8.7Superannuation mandate of the particular superannuation fund.Funds

Note: The above represents a summary of the Offer. Applicants who wish to participate in the Offer should read the PDS in its entirety.

About the Fund2


2.1 Unlisted Diversified Property FundThe Fund is an unlisted property trust which the Managerexpects will remain open for new investment and whichprovides Investors with the opportunity to access directproperty ownership returns.

Investors will have access to a diversified portfolio ofprimarily property based investments which is intendedto provide a regular income stream that is partially tax-deferred, with prospects for capital growth over the medium to long-term.

The Manager intends to use the initial $25 million raisedunder this PDS to acquire the Initial Portfolio and to meetthe Fund establishment costs. Further amounts raisedwill then be used to acquire additional investments fromtime to time, in accordance with the Fund’s investmentallocation strategy and criteria.

2.2 Product RationaleThe Manager recognises that Direct Property as anasset class has distinctive characteristics that make it attractive from an investment portfolio perspective.

These attributes include:

• Low volatility of returns due to predictable rentalpayments being a major component of the totalreturn.

• The relatively low and in some cases negativecorrelation to most other investment classes.

• The concessional tax treatment of a portion of the total investment return.

By providing a product that retains the positivecharacteristics of Direct Property while providing the additional benefits of a well constructed liquiditymechanism the Manager believes the Fund will be suitedto Investors seeking investments in Direct Property.

2.3 Investment ObjectiveAlthough the return of the Fund depends on a numberof factors that are outside the control of the Manager,by investing in a diversified portfolio of property basedinvestments the Manager is aiming for Total Returns to exceed both the following benchmarks:

• 3 percentage points over the risk free rate (i.e., the 10 year Government bond rate), and

• the Mercer Unlisted Property Funds Index (pre tax).

Please note Total Returns made by the Fund will be a combination of income returns and capital returnspaid to Investors through the life of the Fund and capitalreturns which may accrue from time to time in the valueof units and generally realised at the time of sale of the Investor’s interests in the Fund.

To ensure an alignment of interests between theManager and Investors, a performance fee has beenincorporated into the Offer which will be based on the achievement of these two benchmarks. Investorsshould note that these benchmarks are not forecasts of the Fund’s likely future performance.

2.4 Key FeaturesThe Fund will provide:

• A strategic and well planned asset allocation process.

• Diversification by investing across property sectorsand geographic markets.

• Income returns paid quarterly, with a tax deferredcomponent.

• Potential for capital growth over the medium to longer term.

• The ability to participate in quarterly withdrawal offers.

• There will be a minimum investment of $10,000 with additional investment in increments of $1,000 thereafter.

Units will be issued to successful applicants within three business days of a valid application.

2.5 Minimum subscriptionA minimum subscription amount of $500,000 must be raised under this PDS. If applications have not beenreceived for the minimum subscription amount withinfour months of the date of this PDS, the Offer will bewithdrawn and all application monies received by theManager will be refunded with interest.

To assist the Fund during its start-up phase theManager has agreed that the costs incurred inestablishing the Fund will not be recovered by theManager until the Fund has $5 million in gross assets.

2.6 WithdrawalsAn Investor’s right to withdraw from the Fund will bedifferent depending on whether the Fund is liquid or not.The Corporations Act provides that a property fund is“liquid” when at least 80% of the value of the assets of the fund are liquid assets (being assets such as cash, marketable securities and any other property theManager reasonably expects can be realised for marketvalue within a time specified in the fund’s constitution).

While the Fund is not liquid, the Manager intends tomake withdrawal offers to Investors every three months,with the first withdrawal offer to close on 30 June 2006.Up to 20 percent of the Fund’s net assets will beapplied to meet withdrawal requests in any 12 monthperiod. The Manager reserves the right to increase or decrease this amount or to not make withdrawaloffers if it considers those offers will not be in the best interests of all Investors.

When the Fund is liquid, Investors can request redemptionof their Units at any time. The Manager will aim to makeredemption payments within 14 days. However, underthe Constitution, the Manager has up to 12 months tosatisfy a redemption request.

The Fund is currently not liquid and as such Investorscan only withdraw by accepting a quarterly withdrawaloffer once they commence.

Investors wishing to withdraw from the Fund shouldrefer to the Manager’s website at www.becton.com.auto access up-to-date information in relation to theliquidity of the Fund and their withdrawal rights.

2.7 Unit pricingThe Unit Price will be fixed at $1.00 per Unit up to andincluding the day minimum subscription is reached andUnits are first issued under this Offer.

Thereafter, the Unit Price for the Fund is calculated daily by determining the net asset value of the Fund,

adding an allowance for acquisition transaction costs(buy spread) and dividing that by the number of Units on issue at the time. Conversely, the price received on a withdrawal is calculated by determining the net assetvalue of the Fund, subtracting an allowance for sellingcosts (sell spread) if applicable and dividing that by thenumber of Units on issue at the time.

For the purpose of Unit pricing, the net asset value of the Fund is calculated by subtracting from the grossassets of the Fund (which includes all investment and financial assets such as debtors and distributionincome receivable from investments) all liabilities of the Fund (including borrowings, accrued costs, charges and expenses, contingent liabilities, provisionsincluding provisions for the cost of acquiring assets and unpaid distributions).

In the unlikely event that the Manager ever needs tosuspend unit pricing, Investors will be notified of this on the Manager’s website at www.becton.com.au. The Manager will use all reasonable endeavours toresolve any pricing issues as soon as possible to avoid any disruption.

2.8 Buy/sell spread Investors should expect a difference between the Unit Price paid to acquire a Unit and the withdrawalprice received on acceptance of a withdrawal offer. This is often called the buy/sell spread. It is caused by the transaction costs incurred in buying or sellingFund property.

Upon the commencement of daily pricing, the Unit Price will be determined by the Manager factoring in an allowance for transaction costs incurred in theacquisition of Fund property. The intention is that newInvestors must contribute towards the costs incurred bypre existing Investors in the acquisition of Fund property.These costs will include, for example, stamp duty,agent’s fees and legal expenses incurred in relation to the acquisition of the Fund property. The Managerhas determined that an initial buy spread of 2.5% will apply to all applications to reflect the Manager’s best estimate of the average cost of acquiring theFund’s investments. For example, if you invest $1,000 the buy spread would be $25.


In determining the withdrawal price of a Unit, theManager subtracts an allowance for transaction costs incurred in funding withdrawals. These costs are deducted to ensure remaining Investors are notdisadvantaged by bearing all the costs of disposing of the Fund property. Those costs might include, forexample, agent’s fees, legal expenses and registry fees. The Manager expects that under normalcircumstances the withdrawal of Units will be funded from the issue of new Units rather than from the sale of properties and therefore the Fund will not incurtransaction costs. In these circumstances the sellspread is expected to be nil.

Investors should note that the buy/sell spread is not a fee paid to the Manager. It is retained in the Fund to meet transaction costs. If transaction costs change, the Manager may adjust the buy/sell spread. Materialadjustments to the buy/sell spread will be detailed in a supplementary PDS. If the changes are not materialthen information on the buy/sell spread will be updatedon the Manager’s website at www.becton.com.au.

2.9 DistributionsDistributions paid to Investors are calculated basedupon all Investors on the register on the last day of therelevant quarter and paid in proportion to the number of Units held. Distributions are made within 30 days ofthe end of the September, December, March and Junequarters. All distributions will be made via electronicfunds transfer.

2.10 Distribution reinvestmentThe Manager intends to operate a distribution reinvestmentplan, under which Investors may choose to reinvest their distributions from the Fund to acquire further Units. Investors may choose to join or withdraw fromthe distribution reinvestment plan at any time, byproviding the Manager with 30 days notice in writing.Investors should note that if they do not participate inthe distribution reinvestment plan, then their beneficial

ownership in the Fund may be diluted over time, relative to the Investors who participate.

Distributions are reinvested on the day of payment of the relevant distribution.

The price applying to Units issued under the distributionreinvestment plan will be the Unit Price (excluding anybuy spread) which applied on the first business dayafter the end of the quarter to which the distributionrelates.

The Manager may at any time change the terms of the distribution reinvestment plan or decide to cancel,suspend or reactivate the plan. The Manager will giveInvestors at least 30 days notice in writing beforemaking any changes to or cancelling the plan.

2.11 BorrowingsThe Manager recognises that both LPTs and UnlistedProperty Trusts generally have a level of borrowing(sometimes referred to as gearing) against their propertyassets. In order to manage the borrowing level of theFund, the Manager will calculate the borrowing level on a “look through” basis which will take into accountthe gearing levels in the underlying investment vehicles.The target level of borrowing in the Fund will be 60%LVR. The Fund will not borrow to acquire the InitialPortfolio but it will be exposed to the debt maintained in the underlying investments.

The Fund may borrow in its own capacity incircumstances where it acquires real property. In thiscircumstance the Fund may increase its borrowinglevels for an initial period of nine months in order tofacilitate the acquisition.

The Fund may also negotiate with a third party financierfor a line of credit up to a maximum of 5% of the netassets of the Fund. This line of credit may be put inplace for the sole purpose of funding withdrawals. Anyline of credit (drawn or undrawn) will be incorporated in the target borrowing level calculation.

InvestmentStrategy3


3.1 Investment Allocation Strategic Asset AllocationIn October 2005 the Manager commissioned anindependent research report by Atchison Consultants to develop a strategic asset allocation for the Fund. The brief was to provide commentary on the preferredallocation of investments across the traditional commercialproperty sectors (retail, office and industrial) togetherwith an exposure to LPTs and cash. The report reviewedboth historical returns (20 year and five year periods)and forecast returns (upcoming three years) for theidentified asset classes. The aim was to derive adiversified portfolio with similar characteristics to a100% Direct Property portfolio, but providing liquiditythrough the LPT and cash allocations.

Based on this report, the Manager has adopted an initial target asset allocation for the Fund below.

Due to the timing of particular investments and certainfactors affecting the Fund or its underlying portfolio, the Fund’s asset allocations may fall outside the targetallocation ranges from time to time.

The Atchison report highlighted the portfolio allocation below can provide commensurate returnswith significantly lower volatility compared to thosegenerated by a portfolio comprised only of DirectProperty. In addition, the target portfolio allocation allows the Manager to make periodic withdrawal offersand therefore provides Investors a higher level ofliquidity than would be generally available in a DirectProperty portfolio.

Asset category* Target Min. Max.% % %

Direct Property – Retail 35 30 40

Direct Property – Office 30 20 40

Direct Property – Industrial 15 12.5 17.5

LPTs 15 12.5 17.5

Cash 5 0 15

*No two asset categories may comprise more then 75% of the total portfolio.

The following table compares the target allocation against a 100% Direct Property portfolio over the observed periods:

Variable 20 Year 20 Year 5 Year 5 Year 3 Year 3 YearHistorical Historical Historical Historical Forecast Forecast

Target 100% Direct Target 100% Direct Target 100% DirectPortfolio Property Portfolio Property Portfolio Property

Total Return per annum 11.2% 10.8% 10.7% 9.7% 9.3% 9.5%

Volatility of Total 2.9% 3.3% 7.5% 11.7% 5.7% 9.5%Return per annum

Probability of Total 54.6% 48.2% 60.0% 53.3% n/a n/aReturn being greater than the Mercer Unlisted Property Funds Index

Probability of Total 81.4% 73.6% 43.9% 42.9% 54.0% 53.1%Return being greater than 10-Year Government Bond Yield + 3 percentage points

Probability of Total 84.8% 80.7% 72.3% 61% 72.6% 64.9%Return being greater than CPI + 3 percentage points

Source – Atchison Consultants October 2005

Investors should note that as the Atchison report isbased on generic property sector data neither the pastnor forecast performance data in the above table arereliable indicators of the Fund’s future performance.

The Manager will review the target allocation annually inan effort to ensure the Fund’s return and risk objectivesare met.

Tactical Asset Allocation

The Atchison report also identified that tactical assetallocation in the portfolio has a material impact on thereturn but not on the volatility of the portfolio.

The Manager has a strong record of achievement in theproperty industry and the skills and experience of theManager provide a solid platform for effective tacticalasset allocation decisions.

The Fund will initially invest in the Becton IndustrialProperty Trust, the Becton Retail Property Trust and theBecton Office Property Trust (the ‘Becton Sector Trusts’).These are sector specific Unlisted Property Trustsoperated by the Manager. For details on the BectonSector Trusts please refer to page 16, 17 and 18. The Becton Sector Trusts will provide Investors with an immediate entry into a well established, diversifiedportfolio of property assets located across Australia.

Investors will benefit from the Manager’s expertise andexperience in managing and growing these Direct Propertyportfolios. The Manager may consider it in the bestinterests of the Fund to acquire whole or partial interestsin other Unlisted Property Trusts (whether or not thosetrusts are operated by the Manager or its associates).This may include stapling the Fund with other UnlistedProperty Trusts if the Manager considers this to be inthe best interest of Investors.

The Fund will invest in money market securities (such as cash and other liquid financial instruments with a duration of less then 12 months) and LPTs. Thisexposure to liquid investments will assist in fundingquarterly withdrawal offers.

The Fund also has the flexibility to invest in higher yielding,non traditional property investments, including propertybased equity investments and social infrastructure. TheManager believes these investments should only be asmall proportion of the total portfolio and at a time whenthe Fund is of a significant size (not before $100 millionin gross assets) to absorb any extra risk that may attachto such investments.The Manager may modify the Fund’s investment strategyafter providing Investors with 30 days notice. Detail ofchanges to the Fund’s investment strategy will be madeavailable on the Manager’s website www.becton.com.au.


3.2 Investment CriteriaThe investment criteria for each asset category are:

Direct PropertyThe Manager will invest in Direct Property by acombination of investments in Unlisted Property Trusts and by real property acquisitions.

(a) Investments in Unlisted Property Trusts

The Fund will invest in Unlisted Property Trusts whichin turn own, or hold investments in, real property.

The allocation to Direct Property in the InitialPortfolio consists of wholesale investments in theBecton Sector Trusts. The investment criteria for theBecton Sector Trusts are consistent with the criteriathe Manager has established for acquiring realproperty for the Fund (refer Section 3.2(b)).

In certain circumstances the Manager may invest in Unlisted Property Trusts operated by third partymanagers. In assessing a potential investment theManager will have regard to the extent to which the third party manager applies investment criteriaconsistent with the Manager’s.

(b) Investments in real property

All acquisitions of real property for the Fund will be made strictly in accordance with the followinginvestment criteria;

i) each property must be commercial in nature;

ii) the purchase price must be supported by a writtenvaluation provided by an independent valuer;

iii) each property will be located in an established orappropriately zoned precinct within the metropolitanboundaries of a capital city or regional centre inAustralia or New Zealand;

iv) an acquisition may initially be funded wholly bydebt, with a requirement that such debt is paid

down to a LVR not exceeding 65% within ninemonths of the acquisition;

v) the value of any one property must not amount to more than 35% of the total value of the Fund’s gross assets, measured at the date of acquisition;

vi) each property must be capable of achievingcomparable returns and tax-deferred benefits tothose generated by the Fund’s other investments;

vii) the Manager must commission an independentbuilding condition report which, in the reasonableopinion of the Manager, provides a satisfactoryassessment of the condition of any building and services located on the property, togetherwith a satisfactory forecast of the reliability andlongevity of those buildings and services;

viii) an acquisition may constitute the purchase ofvacant land with a building to be constructed, or under construction, in circumstances where a suitable tenant has pre-committed to a leaseterm of not less than five years and otherdevelopment risks have been largely mitigated;

ix) the Manager shall commission an independentquantity surveyor’s report on each property which,in the reasonable opinion of the Manager, identifiessatisfactory anticipated annual depreciationbenefits available to Investors; and

x) the Manager shall obtain an independent legaldue diligence which, in the reasonable opinion of the Manager, satisfactorily reports that therelevant titles, leases and licenses contain termsand conditions which one would ordinarilyexpect to find in those documents in relation to similar properties and do not impose anyunduly onerous obligations on the landlord.

Listed Property TrustsThe Fund will invest a proportion of its assets in AustralianLPTs. Where this allocation is below $10 million it will be managed internally by the Manager with the objectivebeing to track the investment performance of theS&P/ASX200 Property Price Index.

When the proportion of the Fund invested in LPTsexceeds $10 million the Manager will review themanagement of this allocation. The Manager may adopt an active management approach at this point in time. Active management chooses an investmentstrategy which aims to provide greater returns than theindex approach. The Manager may choose to manage

the LPT allocation via an outsourced manager, or maycontinue to provide this function internally.

CashThe Fund will invest in money market securities such ascash and other liquid financial instruments with durationsof less than 12 months. Exposure to cash investmentsshould assist in funding quarterly withdrawal offers.

Changes in Investment CriteriaThe Manager may modify the Fund’s investment criteriaafter providing Investors with 30 days notice. Details ofchanges to the Fund’s investment criteria will be madeavailable on the Manager’s website, www.becton.com.au.

3.3 Initial PortfolioFor the initial target equity raising of $25 million, the proforma balance sheet of the Fund is expected to be:

Balance Sheet1

Minimum subscription Target equity raising$’000 $’000 %

AssetsBecton Retail Property Trust2 175 8,692 35Becton Office Property Trust2 150 7,450 30Becton Industrial Property Trust2 75 3,725 15LPTs 75 3,725 15Cash – term deposit 25 1,243 5

Total assets 500 24,835 100

LiabilitiesNil – –

EquityUnits on issue @ $1.00 per Unit 500 25,000Less establishment and transaction costs3 nil 165

Total Equity 500 24,835

Key StatisticsNet asset backing per Unit $1.00 $0.99

1. The proforma balance sheet has been prepared in accordance with A-IFRS requirements.2. Provided on pages 16, 17 and 18 is a summary of the key features of the Becton Sector Trusts. 3. Transaction costs include fees for professional services (legal, accounting & consulting), PDS production and printing inclusive of GST.


Becton Retail Property Trust OverviewProperty typeThe current portfolio of 13 properties consist of a 50%ownership in a major sub regional shopping centre,major chain retail outlets, bulky goods shopping centresand a food based neighbourhood shopping centre.The properties are located throughout Australia andvalued at $134.45 million as at November 2005.

Property locationsThe properties are located in well established retail areas in Western Australia, South Australia, Victoria,New South Wales and Queensland.

Key Performance Year EndedIndicators1 30 June 2005

Cash distribution (cents per unit) 8.50

Tax deferred portion 100.00%

Equivalent pre-tax return2 16.50%

As at 30 November 2005

Gross asset value $134.45m

Current LVR 71%

% of current debt fixed 74%

Weighted average term to expiry of debt facilities 3.40 yrs

Weighted average lease expiry (by income) 5.62 yrs

Number of tenants 174

1. Past performance is no indication of likely future performance.2. For an individual on a 48.5% rate of tax and a unit price of $1.00.

Major assets

Lease expiry profile by income

Geographical diversification by income

Northpoint HM Retail Centre ($16.2m)

Freedom HM Centre ($12.3m)

Southlands Boulevard SC ($37m)

Lakes Central ($12.4m)

232 Brisbane Road ($11.5m)

Northwest Plaza ($15.8m)

Others ($29.25m)

South Australia (2%)

New South Wales (4%)

Western Australia (35%)

Queensland (51%)

Victoria (5%)

Tasmania (3%)

40%

30%

20%

10%

0%

Hol

ding

ove

r

% o

f gro

ss in

com

e

2005

2006

2007

2008

2009

2010

2011

2012

2013

+

Top ten tenants (40% of total portfolio income)15%

12%

9%

6%

3%

0%

Spo

tligh

t S

tore

s

% o

f gro

ss in

com

e

Bun

ning

s W

areh

ouse

Hoy

t’s C

inem

as

Food

land

Lim

ited

Col

es M

yer

Goo

d G

uys

The

War

ehou

se G

roup

IGA

Sup

erm

arke

ts

Cam

pmar

t

Free

dom

Fur

nitu

re L

imite

d

NQ

Ret

ravi

sion

Becton Industrial Property Trust OverviewProperty typeThe current portfolio consists of 18 well located andtenanted industrial properties located throughout Australiaand valued at $122.9 million as at November 2005.

Property locationsThe properties are located in well established industrialareas within Western Australia, Victoria, South Australia,Queensland, New South Wales and the Northern Territory.







Current LVR 62%






Major assets



12-13 Dansu Court ($10.4m)

14-17 Dansu Court ($12.4m)

247 Balcatta Road ($15.0m)

Spearwood Dist Park ($24.5m)

7-13 Keys Road ($9.95m)

39-45 Wedgewood Road ($8.3m)

Other ($42.35m)

New South Wales (3%)

Western Australia (52%)

Victoria (34%)


Northern Territory (3%)

25%

20%

15%

10%

5%

0%

Hol

ding

ove

r

% o

f gro

ss in

com

e

2005

2006

2007

2008

2009

2010

2011

2012

2013

+

Top ten tenants (63% of total portfolio income)15%

12%

9%

6%

3%

0%

Lake

woo

d Lo

gist

ics

% o

f gro

ss in

com

e

ER

G

Am

cor

Mitr

e 10

Aus

tral

ia

Dan

a A

ustr

alia

Pap

erlin

x A

ustr

alia

Wes

tlea

(Cou

rier

Aus

tral

ia)

MC

K P

acifi

c (P

lexi

cor)

Woo

ldum

pers

Aus

t

Gro

-Mar

ket

Logi

stic

s


Becton Office Property Trust OverviewProperty typeThe current portfolio consists of three well located andtenanted office buildings located throughout Australiaand valued at $55.5 million as at November 2005.

Property locationsThe properties are located in well establishedcommercial areas in South Australia, Northern Territoryand the Australian Capital Territory.







Current LVR 61.3%






Major assets



Allianz House Adelaide ($15.7m)

33 Allara Street Canberra ($26.0m)

Cavenagh House Darwin ($13.8m)


Australian Capital Territory (46%)

Northern Territory (25%)

50%

40%

30%

20%

10%

0%

Hol

ding

ove

r

% o

f gro

ss in

com

e

2005

2006

2007

2008

2009

2010

2011

2012

2013

+

Top five tenants (96% of total portfolio income)50%

40%

30%

20%

10%

0%

Nor

ther

n Te

rrito

ryG

over

nmen

t

% o

f gro

ss in

com

e

Allia

nz

Ren

t gu

aran

tee

Tels

tra

Dep

artm

ent

of In

dust

ry,

Tour

ism

& R

esou

rces

Investmentconsiderationsand risks 4


4.1 GeneralThe considerations and risks of an investment in theFund are similar to the considerations and risks ofinvesting in real property assets directly.

Investors should be aware the value of the Fund propertyand the income it generates is influenced by a numberof factors, including some outside the control of theManager. The following is a summary of the major risksyou should be aware of when investing in the Fundtogether with the steps the Manager takes to mitigatesuch risks.

4.2 Tenancy risk The Fund’s income is dependent upon the tenants ofthe properties, to which the Fund has exposure, fulfillingtheir obligations under the terms of the leases. If a tenantfails to fulfil its obligations under its lease, then the Fund’sincome may fall. There is also the risk leases will not berenewed on their expiry and demand for commercialproperty may fluctuate resulting in increased vacancyrates, reduced market rents and changes in value.

The Manager seeks to minimise tenancy risk bydiversifying the Fund’s investments across differentproperty sectors and geographic markets and bytargeting multiple tenants on varying lease expiries. In addition, the Manager will actively manage theproperties to ensure that tenants are constantly meeting their obligations under their leases.

4.3 Borrowing risk By borrowing money to make investments, the potentialfor gains and losses increases. In addition, interest ratefluctuations may result in increased interest costs and alower return to Investors. There is also a risk that debtfacilities may not be renewed on expiry.

The Manager actively manages interest rate exposuresthrough fixed interest rate agreements with financiers.The Manager has negotiated fixed interest agreements on the majority of debt within the Becton Sector Trusts. Although these agreements will expire over

the forthcoming five years, the Manager will seek to limit both the interest rate exposure and the risk of non-renewal beyond these dates by liaising withexisting financiers well in advance of these dates. The Manager will only make investments where it is satisfied that interest rate exposure has beenappropriately addressed.

4.4 Asset risk If properties require structural repairs, the cost of which is in excess of any allowance made, the incomereceived by the Fund and the value of the propertiesmay fall. There is also the risk property assets could be destroyed by fire or some other disaster.

The Manager seeks to limit the Fund’s exposure toasset risk by thorough due diligence investigations at the point of asset purchase, the ongoing activemanagement of the assets and ensuring that the assets are appropriately insured.

4.5 Liquidity risk Units in the Fund are currently illiquid. At present there is no secondary market and as such Investors shouldconsider their investment long-term and illiquid.

To reduce liquidity risk, the Manager intends to makewithdrawal offers to Investors quarterly. However, theManager may elect not to make a withdrawal offer if, at the time, the Manager decides it would not be in the best interests of Investors to do so.

4.6 Dilution risk Dilution of Investors’ beneficial interests in the Fund may occur from time to time as the Fund issues Units to new Investors. That is, an individual Investor’sproportional beneficial ownership of the Fund propertymay be reduced to the extent the Investor does notreinvest their distributions or participate in the issue of new Units.

As the fund raises new equity an investor who does notwish to be diluted will need to subscribe for additionalequity to maintain their proportionate ownership.

4.7 Currency riskAdverse movements in exchange rates will affect thevalue of capital and income of any investment of theFund which is exposed in any way to internationalproperty assets.

The Manager will look to ensure that any investmentwith exposure to currency risk has appropriateunderlying borrowing arrangements (i.e., borrowing inthe currency of the asset purchase acts as a naturalhedge) and currency hedging arrangements.

4.8 Development riskIn certain circumstances, the Fund may be exposed to a limited extent to development risk, as a result ofrefurbishment operations or ongoing development on its properties. Development can be risky because theFund may have little control over such items asconstructions costs, building risk, planning anddevelopment consents.

The Fund will not invest in Unlisted Property Trusts or LPTs that rely primarily on development activity for income. Where a property of the Fund is exposed to development risk, the Manager will seek to limit suchrisks through accurate planning and costing, activemanagement of the development process and turn key or fixed price contracts for building works.

4.9 General economic risks Changing local or global economic conditions mayaffect the resale value of the Fund property. Also, the tax status of income distributed to Investors may be influenced by changes in taxation laws or their interpretation.

The Manager maintains a detailed understanding ofcurrent economic conditions and relevant legislativechanges with a view to positioning Fund investments toadjust to changing macro and micro economic forces.

4.10 Property securities riskReturns from both LPTs and Unlisted Property Trustsare affected by the underlying strength of the cashflows, balance sheets and management of the propertyassets held by those trusts. In particular, the returns areaffected by the supply of, and demand for, investmentproperty and issues such as rental rates, borrowinglevels, and the level of net income (including theamounts of tax-deferred income) derived from theunderlying properties.

The price of investments and the level of income(including the level of tax-deferral) may fluctuate and it is not always possible to protect the value of yourinvestment from all risk. However the Manager willmaintain an investment management process whichseeks to ensure that the underlying investment assetsremain appropriate given changing market conditions.


The Manager

5

5.1 The ManagerThe Manager is an unlisted public company which holdsan AFSL (number 223739) authorising it to operate andmanage the Fund.

The Manager is the specialist property fundsmanagement division of the publicly listed BectonGroup. Its mandate is to:

• actively manage and maximise existing investor funds; and

• promote investment opportunities for investors toparticipate in the long-term ownership of qualityproperty assets.

The Manager and its associates have arranged over 25 property financing and syndication vehicles (includingthe Fund) holding assets valued in excess of $670 million.Currently the Manager and its associates manage 23public and two private investment vehicles on behalf of over 6,000 investors.

The Becton Group was established in 1976 and has anenviable history of successful high quality commercial and residential property development. Today the BectonGroup is a diversified property group involved in retirementvillage ownership and management, property fundsmanagement and a holiday ownership club as well as itsongoing property development and construction activities.In July 2005 the Becton Group listed on the AustralianStock Exchange (ASX Code BEC) and has a marketcapitalisation of $150 million (as at 30 November 2005).

5.2 Directors of the ManagerExecutive DirectorArthur Apted, Managing Director. Arthur joined theManager as Executive Chairman in February 2005 andbecame Managing Director in September 2005. Arthur’smost recent role is that of Managing Director of the IndustrySuperannuation Property Trust (ISPT), having played a pivotal role in the creation and growth of that business.ISPT is one of Australia’s largest unlisted property funds with $3 billion under management. Arthur is a Fellow of theAustralian Property Institute and holds a Master of BusinessAdministration, Bachelor of Economics and GraduateDiploma of Applied Finance and Investment.

Non-Executive DirectorsBrian Pollock, Chairman. Brian has over 35 yearsexperience in superannuation, financial services andproperty investment. Brian became Chairman of theManager in September 2005. He currently holdsdirectorships with Becton Group (Deputy Chairman),

Members Equity Portfolio Management Ltd (Chairman),Programmed Maintenance Services Limited, MacquarieReal Estate Equity Fund No.1, No.2, No.3 and No.4 andClive Peeters Ltd (Chairman).

Hamish Macdonald, Becton Group Chief ExecutiveOfficer. Hamish has many years of international, nationaland local experience in the property and constructionindustry gained with Civil and Civic and Lend Leasebefore joining the Becton Group. He holds a Bachelor of Building Degree (Honours) and is an Associate of the Financial Services Institute of Australasia.

Mark Taylor, Becton Group Finance Director. Mark is responsible for all finance and accounting mattersincluding the funding of new projects and the raising ofcorporate debt and equity. Mark holds a B.Sc. (Hons) and postgraduate qualifications in accounting and treasurydisciplines. He is a member of the Australian Institute of Chartered Accountants, the Australian Institute ofCompany Directors, the Finance and Treasury AssociationLimited and the Australian Institute of Management.

5.3 Other key personnelMatthew Chun, Chief Investment Officer. Matthew hasover 14 years experience in property and is responsiblefor managing the acquisitions, disposals, funding anddevelopment opportunities of the Manager. The individualfund managers report to Matthew and he coordinatesand oversees the investment approval process to ensurethat all investment decisions are made in line withinvestment strategy. In addition, Matthew plays a keyrole in the development of new product offerings. Hewas previously employed with Cbus Industry Superfundand was responsible for investing over $250 million invarious property opportunities. Matthew was awardedthe Young Property Achiever of the Year 2002 by theAustralian Property Institute. Matthew holds a Bachelorof Economics, Graduate Diploma of Property, GraduateDiploma of Applied Finance and Investment and is alicensed Real Estate Agent in Victoria.

Peter Balsarini, General Manager Corporate and FundManager – Becton Diversified Property Fund. Peter has over15 years experience in the financial services industry havingpreviously been the Chief Financial Officer and CompanySecretary of Becton Properties Limited. His current role withthe Manager focuses on responsibility for the structuring,sourcing, negotiation and management of all debt relatedinstruments. In addition, Peter is responsible for thedevelopment of new product offerings of the Managerincluding this Fund. Peter holds a Bachelor of EconomicsDegree, is a Certified Practicing Accountant and holds a Masters Degree in Business Administration.


Tony Mount, Fund Manager, Becton Industrial PropertyTrust and Becton Office Property Trust. Tony has over ten years experience in the full range of propertyinvestment and management roles in Australia and inEurope. Tony is licensed valuer and has valued a widerange of commercial property, including office, retail andindustrial. Similarly his asset management, propertyacquisitions and sales experience covers most types ofcommercial property. It includes acting for a wide rangeof clients including institutional inventors and privatebuyers/sellers. His experience covers property acquisitionsin corporate entities as well as direct title and leaseholdand structured financing. Tony has built his expertise by working with a number of national and internationalproperty groups including Knight Frank, Deloitte CorporateFinance, Lend Lease (UK) and MCS Property. He holds a Bachelor of Business (Property), is an Associate of theAustralian Property Institute and a licensed property valuer.

Todd Wood, Fund Manager – Becton Retail Property Trust.Todd has over 15 years experience in property valuation,property management, asset management, portfoliomanagement and property development in a number ofnational and international property groups including FPDSavills, Stockland Group, Lend Lease, MCS Property andCentro Properties Group. He holds a Bachelor of Commerce(Property) and Graduate Diploma of Applied Finance andInvestment. Todd is an Associate of the Australian PropertyInstitute, an Associate of the Financial Services Instituteof Australasia and a licensed property valuer.

Neil Kennedy, Investment Reporting Manager. Neil hasextensive investment performance analysis and reportingexperience gained from both funds management andasset consulting and is responsible for the investmentperformance calculation and attribution for the Bectonportfolios. He has held quantitative analyst positions withColonial Investment Management, ANZ Investments andMercer Investment Consulting. Neil holds a Bachelor of Business degree and a Graduate Diploma in AppliedFinance and Investment. He is a qualified CertifiedPracticing Accountant, is an associate of the SecuritiesInstitute of Australia and is currently studying towardsChartered Financial Analyst accreditation. Neil will beresponsible for the internal management of the indexedLPT exposure of the Fund.

Pam Mitchell, Chief Financial Officer. Pam is responsiblefor the financial planning and accounting practices ofthe Manager, including reporting and coordinating ofboth corporate and trust reporting. She is a CharteredAccountant with extensive financial experience in theproperty funds management industry. Her previousexperience includes 11 years with Industry Superannuation

Property Trust, various roles with a number of organisationsassociated with industry superannuation funds and anauditing role with Andersens, Chartered Accountants.Pam is the senior Company Secretary.

Mark Vonic, Head of Acquisitions. Mark is responsible for sourcing, analysing and negotiating acquisitionopportunities. In conjunction with the Manager’s due diligence committee, Mark is responsible forcoordinating the due diligence program and settlementof acquisitions. Mark holds a Bachelor of Economicsdegree and Graduate Diploma of Applied Finance and Investment and is an Associate of the FinancialServices Institute of Australasia.

Anne Jordan, Legal Counsel and Company Secretary.Anne has over nine years experience as a propertylawyer and is responsible for managing all legal aspectsassociated with the Manager’s properties, including the contractual and due diligence aspects of propertyacquisitions and disposals, leases, developmentagreements, co-ownership agreements and servicecontracts. She also plays a key role in assisting in the preparation of product disclosure statements,reviewing all other legal documentation including finance documents and, where necessary, liaising with and managing external lawyers.

Darren Brusnahan, General Manager InvestmentServices. Darren is responsible for raising equity and debt capital for the Manager’s products from thefinancial intermediary market. Darren has been in thefunds management industry for over ten years havingworked previously with Colonial and CommonwealthInvestment Services Limited. He holds a Diploma ofFinancial Planning, Graduate Diploma of Applied Financeand Investment. He is an Associate of the FinancialServices Institute of Australasia and a member of theFinancial Planning Association and is currently completinghis Masters of Applied Finance and Investment.

Geraldine Holland, Compliance Manager. Geraldineassumes the dual role as Compliance Officer and managesthe required compliance measures under the Manager’songoing AFSL obligations, including complaints handling,breaches, monitoring and supervising authorisedrepresentatives, ongoing training for both responsibleofficers and authorised representatives and any otherreporting obligations to the ASIC. In addition, Geraldine isresponsible for document control, quality assurance andinsurance obligations for both the Manager and its portfolioof properties under management. Geraldine holds aBachelor of Arts (Hons) in Accounting and Finance and aMasters of Business Administration (Finance Specialisation).

Fees andexpenses6


6.1 Fee and other costsThe table below shows the fees and other costs that may be charged to the Fund. These fees and costs may bededucted from the returns on an Investor’s investment or from the Fund assets as a whole. There is no separatepayment required from Investors to meet these fees and expenses.

In setting the fees, the Manager’s philosophy is not to charge ‘fees on fees’. For example, in the Initial Portfolio the Manager will not charge Investors its management fee in relation to the Fund’s investment in the Becton SectorTrusts and the LPT investments where it is managed externally.

Prospective Investors should read all of the information about fees and costs because it is important to understandtheir impact on an investment in this Fund.

Type of fee or expense Amount How and when paid

Fees when money moves in or out of the Fund

Establishment Fee: Nil Not applicableThe fee to open your investment.

Contribution Fee: Nil Not applicableThe fee on each amount contributed to your investment.

Withdrawal Fee: Nil Not applicableThe fee on each amount you take out of your investment.

Termination Fee: Nil Not applicableThe fee to close your investment.

Management costs1

The fees and costs for managing Management Fee: • Based on the Fund’s gross assets.your investment. 0.65% per annum • Payable by the Fund monthly in arrears

(but calculated and accrued daily).• Fees waived for the proportion of funds

invested in the Becton Sector Trusts.• Fees waived for the proportion of funds

invested in LPTs managed via external managers.

Expense Recoveries: • Based on the Fund’s gross assets.Estimated to be 0.2% • Payable by the Fund as and when per annum expenses are incurred.

Performance Fee: • Based on the Fund’s gross assets.20% of the rate by which • Paid in either cash or by the issue ofthe Total Return of the Units to the Manager.Fund out performs the • Only payable where the Total Return of the Mercer Unlisted Property Fund exceeds the risk free rate (10 year Funds Index (pre tax) on Government bond rate) plus a margin of a rolling 3 year basis. 3 percentage points for the relevant period.

• The fee is payable on the first day of the distribution period after the performance fee is calculated but not during the first three full financial years of the Fund.

Type of fee or expense Amount How and when paid

Service Fees2

Investment Switching Fee: Nil Not applicableThe fee for changing investment options.

1. There are additional fees payable to the Manager in relation to the acquisition of real property assets and in the event the Manager is removed as responsible entity for the Fund (See section 6.3).

2. There is a fee paid to the Manager for facilitating the transfer of Units (See section 6.3).

6.2 Example of annual fees and costsThe table below gives an example of the annual fees and costs an Investor may incur over a one year period.Investors should use this table to compare this product with other managed investment products. The exampleassumes that a balance of $45,000 has already been invested in the Fund and that an additional investment of$5,000 is made on the first day of the financial year taking the total balance of investment in the Fund to $50,000while the Fund has no borrowings of its own. Where the Fund borrows to acquire real property then the level ofmanagement fees charged as a portion of an Investor’s investment will increase.

Example Balance of $50,000 with total contributions of $5,000 during year

Contribution fees Nil For every additional $5,000 an Investor puts in, no contribution fees will be charged.

PLUS management costs1 0.85% per annum For every $50,000 invested in the Fund, the Fund will be charged $425 (plus $42.50 GST).

EQUALS cost of Fund If an Investor has a balance of $45,000 invested in the Fund and puts in an additional $5,000 on the firstday of the financial year taking their total balance in the Fund to $50,000, then for that year the Fund will be charged fees of $425 (plus $42.50 GST).

What it costs an Investor will also depend on thefees agreed with their adviser.

1. Additional fees may apply: acquisition fees may be payable if the Fund acquires real property and performance fees may be payable, if the Fund outperforms its benchmarks. If payable, these fees will be met by the Fund.


6.3 Additional explanation of fees and costsManagement feesThe Manager is entitled to a base management fee of0.65% of the Fund’s gross assets. For every $50,000 of gross assets, the Manager is entitled to a fee of $325(plus $32.50 GST), paid monthly in arrears.

Performance feesThe Manager believes that a quantifiable and wellconstructed performance fee aligns the Manager’sinterests with those of the Investors. The Fund provides a performance fee which rewards the Manager forachieving the Fund’s aims, as follows.

If the Fund provides a Total Return over a rolling threeyear period which is greater then 3 percentage pointsabove the risk free rate (i.e., the 10 year GovernmentBond rate) for the period and outperforms the MercerUnlisted Property Funds Index (pre-tax) for the period,then the Manager will be entitled to a performance feecalculated as 20% of the rate by which the Fund hasoutperformed the Mercer Unlisted Property Funds Index(pre-tax) multiplied by the average gross assets of theFund over the relevant period. This fee is not payable for the first full three financial years of the Fund.

For example, assume the following:

• the Total Return of the Fund over the observed threeyear period averaged 12.5% per annum

• the Mercer Unlisted Property Funds Index (pre-tax)averaged 10% per annum

• the average gross assets of the Fund for the period was $25 million, and the Total Return of the Fund exceeded the risk free rate (i.e., the 10 year Government Bond rate) plus a margin of 3percentage points.

Therefore, the rate by which the Fund outperformed the index for the period is 2.5 percentage points. The performance fee is therefore 0.5% (i.e., 20% of 2.5%) of $25 million, which equates to $125,000(plus $12,500 GST).

If payable, the performance fee may be taken by theManager in cash or Units. If taken as Units, the Managermust hold those Units for a period of three years unless it is removed as responsible entity of the Fund.

Additional feesAcquisition fee – the Manager is entitled to a fee of 1.75% of the acquisition price of any real propertypurchased by the Fund. For a property with a purchaseprice of $10 million, the Manager would be entitled toan acquisition fee of $175,000 (plus $17,500 GST).

Removal fee - this fee is payable on the removal of the Manager as responsible entity of the Fund. The fee will be 2% of the Fund’s gross assets and is calculated and paid the day immediately prior to the Manager being removed. For every $50,000 ofgross assets, the Manager will be entitled to $1,000(plus $100 GST).

Unit transfer fee – this is a flat fee of $100 (plus $10GST) which is payable on the transfer of Units, regardlessof the value of the Units transferred. The fee is to coveradministrative expenses associated with the transferprocess. The fee will increase in line with the consumerprice index.

Expense recoveriesThe expenses the Manager is entitled to recover include:

• Fund costs incurred by the Manager in accordancewith the Constitution

• Compliance committee costs

• Audit fees

• Custodian fees

• Legal fees

• Independent consultant report preparation fees

• Bank fees, government fees and taxes.

For example, if the Manager incurs expenses of $1,000(plus $100 GST) in relation to the operation of the Fund,then the Manager will be entitled to $1,000 (plus $100GST) from the assets of the Fund.

Indirect Cost RatioThe Indirect Cost Ratio (ICR) is the total of annual fees and charges received by the Manager andCustodian, including the recoverable expenses of the Fund, expressed as a percentage of the Fund’s total average net assets during the relevant year.

The Manager estimates the ICR of the Fund basedupon the Initial Portfolio will be in the order of 0.85% or $85 per $10,000 of net assets.

The Manager has agreed to cap expense recoveries to ensure the ICR will not exceed 1.20% per annum for the first three years from the date of this PDS.

Wholesale investmentsThe Manager may, on an individual basis, negotiate with Investors in relation to rebates on managementfees in circumstances permitted by the CorporationsAct or applicable relief granted by ASIC. These rebatesare payable by the Manager from its own fees andtherefore do not affect the fees paid by, or thedistributions paid to, other Investors.

CommissionThe Manager does not pay any upfront or ongoingcommissions to any adviser as a result of an investment in the Fund made through an Administration Service. If the Manager did pay commission, or a fee was paidto have the Fund placed on an Administration Service,then any such amount will be paid by the Manager from its own resources. Please note, an adviser mayhowever, charge a fee to those who invest in the Fundthrough an Administration Service.

For Investors who do not invest in the Fund via anAdministration Service, then the Manager may, but doesnot intend to pay any brokerage or commission to theiradvisers. If the Manager does negotiate with an adviserto pay them commission, then such payments will bemade by the Manager from its own resources and willnot represent an additional cost to the Fund or anyInvestor. If any commission is paid, then the advisor is obliged to disclose this amount to the Investor.

Fee changes, deferral and waiverThe fees listed in section 6.1 are maximum fees and the Manager may not increase the fees payable without a special resolution of Investors first having varied the Constitution.

If the Manager considers it to be in the best interests of Investors, then the Manager may waive fees (in whole or part) or may defer payment for any period.

The Manager waives its entitlement to managementfees on the proportion of the portfolio invested in theBecton Sector Trusts.

The Manager will also waive its entitlement to amanagement fee on the proportion of the total portfolioinvested in LPTs where this LPT exposure is managedby a third party.

At the date of this PDS, the Manager is not aware ofany other circumstance which may require the waiver or deferral of the fees disclosed in section 6.1.

Administration ServicePersons investing through an Administration Serviceshould be aware that in addition to the fees andexpenses described above, they will also be liable topay fees to the operator of the service as described in the offer document or guide for the relevantAdministration Service.

Goods and services tax (GST)Unless otherwise indicated, all fees and amounts statedin this PDS are exclusive of GST, although where dollarexamples of fees and expenses are given, then theexpected GST amount is also stated. Where GST ispayable and an input tax credit is available, then the Fundwill be credited with the input tax credit obtained fromthe tax office. For some fees and expenses, a full creditmay not be available. Therefore, in the dollar examplesprovided, the GST amounts represent the maximumGST the Fund will have to pay on the fee or expense.


Taxation

7

7.1 GeneralThe Fund is a conventional unit trust that the Managerbelieves will allow a flow through of tax benefits toInvestors. This means that each Investor will be taxedupon their proportional share of the taxable income ofthe Fund.

The Manager is of the view that the Fund will not betaxed as a company pursuant to the provisions ofDivision 6C of the Income Tax Assessment Act 1936.

Investors are advised to seek their own tax advice in relation to an investment in the Fund, as taxationtreatments may differ according to individualcircumstances.

7.2 Tax-deferred incomeThe Manager is of the view that a proportion of theFund’s income paid to Investors will be tax-deferred. Tax-deferred income is obtained when the distributableincome paid to an Investor for a particular year is higherthan the Investor’s proportional share of the Fund’staxable income for the same period. This is due to thedeductions for depreciation, amortisation and capitalallowances available to the Fund.

7.3 Taxation treatment of capital gainsInvestors who are natural persons or trusts will generallybe entitled to a 50% exemption from capital gains tax provided they have held their Units for more than 12 months. Superannuation funds will receive a onethird exemption.

Investors should note that tax-deferred distributionsderived from deductions such as depreciation,amortisation and capital allowances, have the effect of progressively diminishing the cost base of Units, and upon the sale of the Fund property and distribution

of capital, Investors may bear a proportional increase in their capital gains tax burden. However, individuals,trusts and superannuation funds may be entitled to the concessional rate of capital gains referred to in the previous paragraph.

7.4 Tax File Numbers and Australian Business NumbersThe application form attached to or accompanying this PDS, requests that Investors supply their Tax FileNumber (TFN). If a TFN is not supplied, or appropriateTFN exemption information is not provided, income tax is required to be deducted from Fund distributionsat the highest marginal rate plus the Medicare levy(currently 48.5%). In the case of an Investor applying for Units in the course of carrying on an enterprise, it may be appropriate to quote an Australian BusinessNumber (ABN) instead of a TFN. Investors shouldseek expert advice if this situation applies.

7.5 Non-resident InvestorsAn Investor that quotes an overseas address will betreated by the Manager as a non-resident for Australiantax purposes. Non-resident Investors may be subjectedto withholding tax and non-resident income tax deductionson a proportion of any Fund distributions made. It is recommended that non-resident Investorsseek their own tax advice in relation to theirtaxation position.

7.6 Goods and Services Tax (GST)The Manager believes that the GST will not have a material impact on the financial performance of the Fund.

No GST is payable on the issue and sale of the Units.


Additionalinformation8

8.1 ConstitutionThe Constitution is the document that primarily governsthe relationship between the Investors and the Manager.It regulates the rights and obligations of the Investorsand the Manager and sets out the powers of theManager in operating the Fund. A copy of the Constitutionis available, free of charge, from the Manager.

A number of aspects of the Fund referred to in this PDSare embodied in the terms of the Constitution.

8.2 Complaints handling procedures The Manager has an internal complaints handlingprocess. If an Investor has a complaint, then at firstinstance, the Investor should contact the Manager’scomplaints handling officer on 1800-182-257 or write to the Manager. If an Investor is in any way dissatisfiedwith the manner in which the Manager handles anycomplaint and the Manager has not been able tosatisfactorily resolve the complaint, then the matter can be referred to an external complaints handling body, the Financial Industry Complaints Service (“FICS”).

FICS can be contacted at:

Financial Industry Complaints ServicePO Box 579, Collins Street West Melbourne VIC 8007 Phone 1300 78 08 08 Fax (03) 9621 2291

Please note, those persons who have invested in the Fund through an Administration Service shouldcontact the operator of that service for the resolution of a complaint.

8.3 Statement regarding labourstandards and environmental, social and ethical considerationsThe Manager does not, in the context of makingdecisions relating to the Fund, take into account labour standards or environmental, social or ethicalconsiderations, except to the extent that the Managerconsiders these issues have the potential to materially

impact on the merits of its decisions in relation to theFund. This means that if the sustainability or value of theFund is adversely affected due to unacceptable labourstandards or environmental, social or ethical factors,then the Manager may choose not to invest further or to dispose of the investment.

8.4 Continuous disclosureOnce the Fund has more than 100 Investors it willbecome a disclosing entity under the Corporations Act. As such, it will be subject to regular reporting anddisclosure obligations. These require the Fund to lodgeannual and half yearly reports and notice of otherimportant events with ASIC. All this information may beobtained from, or inspected at, any ASIC office or it maybe obtained free of charge by contacting the Manager.

8.5 Administration Service DisclosureThe Manager authorises the use of this PDS asdisclosure for those who wish to access the Fundthrough an Administration Service where the operatorhas provided the Manager with a written undertaking in accordance with ASIC requirements. A person whoinvests in the Fund though an Administration Servicedoes not become an Investor in the Fund. The operatorof the Administration Service acquires these rights andcan exercise them, on behalf of the Investor accordingto arrangements governing the Administration Service.

To direct an Administration Service to invest in the Fund,the investor will need to complete the application formfor that Administration Service. Additional investments,withdrawals or transfers must also be directed throughthe operator of that service. Those who invest throughan Administration Service will have their income dealtwith according to their agreement with the AdministrationService operator.

8.6 Cooling-off rightsInvestors should note that, while the Fund is not liquid (as that term is defined in the Corporations Act), there will not be a cooling-off period in relation to applications. Once an application has been lodged, it cannot be withdrawn.


In the event the Fund becomes liquid, then a retail client(as that term is defined under the Corporations Act) willhave a 14 day cooling off period in relation to their Units.

Please refer to the Manager’s website atwww.becton.com.au for information as to whether the Fund is liquid or illiquid and whether cooling-offrights apply.

8.7 Superannuation fundsAs any borrowings are to be taken out in the name ofthe Manager, Investors are not deemed to be borrowingin their own name. This means, superannuation fundsmay invest in the Fund, subject to the investmentmandate of the particular fund.

8.8 Valuation methodologyPursuant to the Constitution, the Manager maydetermine the valuation methods and policies appliedfrom time to time to determine the net value of the Fund property.

Unlisted Property Trust investments will be recorded at their initial cost and will be revalued (at least twice a year) at their fair value. Fair value is determined usingthe latest financial information available to the Manager.

Real property assets will initially be recorded at cost(including capitalised acquisition costs in relation to theirpurchase). Thereafter, the value of an asset will be themarket price of the asset, unless the Manager considersthere is no market for the asset or the market pricedoes not represent the asset’s fair value. Generally, the market price of a property will be the most recentvaluation obtained from an independent valuer. TheManager will have a property valued if it believes therehas been a substantial movement in its value at anytime. Each property will be independently valued at least once every year.

Where the Fund invests into LPTs these investments will be “marked to market” on a daily basis (i.e., the

value of the Funds LPT investments will move on a daily basis in accordance with movements in the priceof the LPTs on the Australian Stock Exchange).

8.9 Related party investmentsInvestors should note that although the Managerintends to acquire a diversified portfolio of propertybased investments, the investments made in UnlistedProperty Trusts will (at least initially) consist primarily of wholesale investments in the Becton Sector Trusts.However, the Fund is under no obligation to invest in other Unlisted Property Trusts operated by theManager or its associates nor is the Becton Groupunder any obligation to offer investment opportunities to the Fund.

The Manager is a member of the Becton Group.Companies in and associated with the Becton Group may provide services to the Manager and/or the Fund, or transact with the Manager and/or the Fund in other ways. The Constitution specificallyauthorises the Manager (and people associated with it) to enter into transactions with the Fund or a person dealing with the Fund, or have an interest in any such transaction.

These types of dealings may include:

(a) The acquisition by the Fund of assets owned ordeveloped by the Becton Group.

(b) The purchase or sale of assets from/to entitiesassociated with the Manager

(c) Project management of capital works.

(d) Property or asset management and leasing services.

Any transactions or dealings will be conducted oncommercial arms length terms.

The Manager, the directors and employees of theManager and other persons and entities associated with the Becton Group, may hold units in the Fund.

8.10 Unit ClassesInvestors who make an investment in the Fund underthis Offer will receive Units in the Fund. These are“ordinary units” in the Fund. The Manager may issueadditional classes of units in the Fund in the future. For example, liquidity units may be issued to an entity(including the Manager or its associates) to assist infunding withdrawals. These liquidity units will haveredemption priority over other unit classes. The Managermay also issue partly paid units in the Fund if it decidesthis would be in the best interests of Investors.

8.11 ConsentsEach director of the Manager has consented to theissue of this PDS.

Atchison Consultants has given, and has not before the date of this PDS withdrawn, its consent to this PDSbeing issued with a reference to Atchison Consultantsand the research report provided to the Manager.Atchison Consultants are not responsible for the issueof the PDS, nor are they responsible for any particularpart of it except in relation to their research report. For the research report, Atchison Consultants were paid $7,000 (plus GST).

8.12 Reporting to InvestorsInvestors will receive a distribution statement each quarter which discloses the number of Units held and thedistribution paid for the preceding quarter. A completeset of financial statements and an annual report will bedistributed with the June quarter distribution statements.A taxation statement will also be distributed as soon aspractical after the end of each financial year.

Investors with queries can phone the Manager’s freecallnumber 1800 182 257. Investors can also access theManager’s website at www.becton.com.au to reviewgeneral information on the Fund including pricing andvarious reports as they are produced.

Please note that persons investing in the Fund through an Administration Service will not receive statements orreports from the Manager directly. Instead, this informationwill be provided to the operator of the AdministrationService who will pass on this information in accordancewith arrangements governing the relevant service.


Glossary of terms9

Administration Service an investor directed portfolio service or similar service, such as a master trust, wrap account or nominee or custody service.

AFSL Australian financial services licence.

A-IFRS Australia’s equivalent to the International Financial Reporting Standards

ASIC Australian Securities and Investments Commission.

Becton Group Becton Property Group Limited ABN 11 082 352 083 and its controlled entities.

Becton Sector Trusts each of the Becton Industrial Property Trust, the Becton Retail Property Trust andBecton Office Property Trust details of which are provided on pages 16, 17 and 18.

Constitution the constitution of the Fund dated 8 December 2005 and lodged with ASIC (as amended).

Corporations Act the Corporations Act 2001 (Commonwealth).

Custodian Sandhurst Trustees Limited ABN 16 004 030 737 or such other person acting as custodian of the Fund from time to time.

Direct Property an investment in commercial property which, in addition to the acquisition of realproperty itself, can also be made by an investment in an Unlisted Property Trust.

Fund Becton Diversified Property Fund ARSN 117 509 921.

GST any goods and services tax or similar tax imposed in Australia.

Initial Portfolio the portfolio of assets detailed in section 3.3.

Investor a person holding Units in the Fund.

LPTs listed property trusts (including stapled securities) which are listed on the AustralianStock Exchange.

LVR loan to value ratio, being the ratio of total borrowings to gross asset value (expressedas a percentage).

Manager Becton Investment Management Limited ABN 62 090 939 192, the responsible entity of the Fund.

Offer the offer of Units under this PDS.

PDS this product disclosure statement.

Total Return the aggregate of the income and capital gains generated by an investment.

Unit an ordinary unit in the Fund representing the Investor’s proportionate interest in the Fund’s property.

Unit Price the price or amount paid or payable by an applicant for each Unit.

Unlisted Property Trusts a property trust or syndicate which is not listed on the Australian Stock Exchange but which is registered with ASIC as a managed investment scheme and whichacquires and holds real property primarily for the purpose of deriving rental income.


Instructions to applicants10

This section and the application forms which follow are only relevant for those making a directinvestment in the Fund. Those making an investmentin the Fund through an Administration Service shouldrefer to the current disclosure document for therelevant Administration Service and applicationsmust be made on the application form supplied by the Administration Service operator.

When completing the application form please followthese instructions. If you have any questions, pleasephone the Manager on Freecall 1800 182 257. Pleasenote the Manager may accept or reject applications inwhole or part in its absolute discretion.

Applications must be made on the application formattached to, or accompanying, this PDS. The applicationform must not be handed to another person unlessattached to or accompanied by the PDS.

An application must be by an individual, company or any other legal entity acceptable to the Manager. A company should state its ACN/ABN. Applications maybe made by up to three individuals in joint names and/orby a company. Applicants with a non-Australian addresswill be deemed non-residents for the purpose of theIncome Tax Assessment Act unless otherwise notified.

A. Amount Subscribed Please insert the AMOUNT you wish to subscribe. Your application must be for a minimum of $10,000 and thereafter in multiples of $1,000.

B. Investor Details If you currently hold units in a trust operated by theManager or its associates, please tick the “CurrentInvestor” box. If you are a new investor, please tick the“New Investor” box. For both current investors and newinvestors, please write the FULL NAME you wish toappear on your holding statement in BLOCK LETTERS.This must be either your own name or the name of a company. Up to three joint applicants may register.Please refer to the examples in the table entitled‘Correct Forms of Registrable Names’ on page 40.

C. Postal AddressEnter your POSTAL ADDRESS and EMAIL ADDRESSfor all future correspondence from the Manager inrelation to your holding in the Fund.

D. Contact Details Please provide your TELEPHONE NUMBER/S andCONTACT NAME/S in case the Manager needs tocontact you in relation to your application.

E. Tax File Number/s (TFN), Australian Business Number/s (ABN) or Exemption Code/s Please enter your TAX FILE NUMBER (TFN), AUSTRALIANBUSINESS NUMBER (ABN) if a business account orEXEMPTION CODE/S. Where applicable, please enterthe TFN or ABN for each joint applicant.

Collection of tax file numbers is authorised by tax lawand the Privacy Act 1988. It is not compulsory to provideyour TFN. However, if you do not do so, tax will bededucted from your distributions at the top personalrate plus the Medicare levy. For more information aboutthe use of tax file numbers or available exemptions,please read the booklet ‘New Tax Rules for Savings andInvestments’ available from the Australian Taxation Office.

F. Distribution ReinvestmentEnter the percentage amount of your distribution you would like reinvested under the DividendReinvestment Plan.

G. Direct Credit for Distributions Distributions will be credited directly to the account you nominate with an Australian financial institution.Please provide full details in the spaces provided.Please ensure that your financial institution accountdetails are correct.

H. Payment Details Insert the details of the cheque/s or money order/s you are encl

becton diversified disclosure property fund statement · 12/8/2005 · page 04 becton diversified...

Documents