Benefits of investing in the Spire USA ROC II Fund (AUD)

The significant benefit of this Fund is the opportunity for Australian investors to gain exposure to U.S. real estate with the potential receipt of returns in the form of distributions, generally on an annual basis and a return on capital upon realisation of the assets.

About the Fund

The Fund acts as an Australian feeder fund into the assets of Real Estate Opportunity Capital Fund, LP ("ROC II). ROC II is a US$2.1 billion "buy, fix, sell private equity real estate fund, investing in value-add US multifamily apartment communities and office buildings, which are generally acquired opportunistically from distressed sellers or Mortgagees in Possession.

The Fund owns a 5.88% share of a diversified portfolio of value-add' real estate assets across the US. As at the date of this update, the ROC II portfolio had invested in 52 multifamily apartment communities and 9 office buildings, and of these 11 have now been sold at an average 22.2% net IRR and 1.38x multiple on invested equity. US$1.9 billion in assets remain, which will also be progressively sold down during the harvest period' as each asset's value has been maximised and stabilised.

About the Investment Manager

Bridge is the Investment Manager of the Fund and all of the limited partnerships and other entities which comprise the ROC II Program. Bridge is headquartered in Salt Lake City, Utah, and is a specialist U.S. real estate and real estate funds manager. As at 1 February 2013, Bridge investment vehicles are invested across 14 U.S. states in over 20,000 apartments and 1.5 million square feet of office space. As Investment Manager of the Fund, Bridge assists Spire to promote the Fund. In its role as Investment Manager of all the entities in the ROC II Program (in which the Fund is solely invested), it provides administrative and investment management services to the ROC II Program in connection with Portfolio Investments to be made by the ROC II Program.

How we invest your money

The Fund will solely invest in the Underlying Fund (which is part of the ROC II Program). The Fund, through the ROC II Program, aims to generate high total returns for investors via exploiting the polarised U.S. real estate market, particularly in the multifamily apartment sector.

The Investment Manager expects to target investments with the following characteristics:

• typically acquired at discounts to current replacement cost of between 50% and 80%;

• strong fundamentals, but typically sourced from "motivated sellers for whom price is not the only criteria;

• located in growing submarkets, with a focus on cities with strong macro-economic prospects, net in-migration, and job creation above national averages;

• an occupancy rate below the submarket's occupancy level (i.e. below by at least 10%) and with prospects to achieve market occupancy rates and rents within those submarkets;

• investment size of between US$10 - to US$25 million which the Investment Manager considers to be a middle market "sweet spot where competition from both giant, national "financial buyers and from more local "ad-hoc buyers is reduced;

• able to be fully analysed using discounted cash flow analysis prior to investment; and

• projected to be cash flow positive, after applying appropriate financing, either immediately or soon after improvements.