H E AT H L E Y D I R E C T MEDICAL FUND THEMATIC INVESTMENT IN MEDICAL PROPERTIES –Exposure to the strong fundamentals of the Medical Sector –Robust medical tenants on long term leases –Forecast Distribution of 8% p.a*. for the years ending 30 June 2015 and 30 June 2016 *Please refer to “Important Notices” 1 No. HEATHLEY DIRECT MEDICAL FUND No.1 | | INTRODUCTION Heathley Asset Management Limited is seeking to raise $11 million to acquire four properties (Seed Properties) for Heathley Direct Medical Fund No.1 (Fund). The Fund will acquire a portfolio of medical-related direct property over a 2 year period (Investment Period), up to a value of $150 million and following the Investment Period, hold the portfolio for a fixed period of 5 years (Portfolio Management Period). FORECAST RETURNS THE FORECAST DISTRIBUTION BASED ON THE SEED PROPERTIES WILL BE 8.00% P.A*. Forecast Distribution of 8% p.a. for the years ending 30 June 2015 and 30 June 2016 based on the Seed Properties. Distributions will be paid quarterly in arrears. The Fund will aim to provide investors with consistent income derived from long-term leases to quality medical tenants, and capital growth by active management. Providing scale of investment within a tightly held sector is aimed at diminishing risk through diversification of tenants, properties and services whilst increasing potential exit strategies. | INVESTMENT RATIONALE THEMATIC INVESTMENT IN MEDICAL PROPERTIES The management at Heathley have identified the medical property sector as a sound investment for the following key reasons – – Growing level of tenant demand based on key demographics (ageing population) Fragmented ownership which should benefit from – increased concentration and professional management Potential to form a partnership with an operator or – developer to provide a pipeline of investment opportunities. | | INVESTMENT CRITERIA The Fund’s investment criteria will be as follows – Property type: Medical Centres, Specialist Centres and Small Private Hospitals Location: All Properties will be located in strategic locations that have demographics supportive of demand for healthcare Tenants: Various medical operators such as GP clinics, specialist suites or larger healthcare operators Fund WALE: Long-dated WALEs will be targeted to provide certainty of income for the life of the Fund and provide an attractive lease tail on sale to attract potential purchasers. FUND STRUCTURE A TWO YEAR INVESTMENT PERIOD FOLLOWED BY A FIVE YEAR PORTFOLIO MANAGEMENT PERIOD ESTABLISHMENT OF THE FUND INVESTMENT PERIOD COMPLETE INVESTMENT PERIOD The Fund will continue to acquire property up to a value of $150 million YEAR 1 YEAR 2 PORTFOLIO MANAGEMENT PERIOD COMPLETE PORTFOLIO MANAGEMENT PERIOD Consistent income derived from long-term leases and capital growth by active management YEAR 3 The Fund will aim to acquire $150 million of gross assets within the Investment Period of 2 years. The Fund will continue to raise equity for the duration of the Investment Period to fund acquisitions. YEAR 4 YEAR 5 YEAR 6 YEAR 7 Following the completion of the Investment Period, the Fund will have a Portfolio Management Period of 5 years. At the completion of the Portfolio Management Period, the Investors will vote to liquidate or retain the Fund. *Please refer to “Important Notices” HEATHLEY DIRECT MEDICAL FUND NO.1 | SEED PROPERTIES – 4 PROPERTIES – 100% LEASED CHERMSIDE QLD – STRATEGIC HEALTHCARE LOCATIONS CARDIFF, NSW MILDURA, VIC – $ 19M COMBINED PURCHASE PRICE 87-89 LANGTREE AVENUE, MILDURA VICTORIA SYDENHAM, VIC 547 MELTON HIGHWAY, SYDENHAM VICTORIA $3,900,000 Contract Price $4,150,000 Use GP Clinic Use Pathology Occupancy 100% Occupancy 100% Key tenants – TriStar Medical (93% of NLA) – Mildura optical (7% of NLA) Key tenants – St Vincent’s Hospital (Melbourne) Ltd 100% of NLA) WALE by income 6.1 years (as at 31 Oct 2014) WALE by income 3.6 years (as at 31 Oct 2014) Contract Price The property is located in the retail heart of Mildura and comprises a two level commercial building housing a TriStar Medical Group GP clinic and Mildura Optical. The property is a modern and securely leased medical centre, purpose built to accommodate a high grade fitout for the current tenant. The property features high exposure to Melton Highway and Calder Park Drive with on grade parking for 30 vehicles. LOTS 4, 5 & 6, 956 GYMPIE ROAD, CHERMSIDE QUEENSLAND 52 PENDLEBURY ROAD, CARDIFF NEW SOUTH WALES Contract Price $5,300,000 Contract Price $5,650,000 Use Radiology / Pathology / Café Use Private Hospital/Private Clinic Occupancy 100% Occupancy 100% Key tenants Lot 4 – Sonic Healthcare (27% of NLA) Lot 5 – Nikas (Café) (11% of NLA) Lot 6 – Southernx Imaging (62% of NLA) Key tenants – Healthe Care & Pendlebury (76% of NLA) – Management Services (24% of NLA) WALE by income 4.6 years (as at 31 Oct 2014) WALE by income 5.8 years (as at 31 Oct 2014) The strata lots form part of the ground floor of the Chermside Medical Complex directly adjacent Westfield Chermside Shopping complex in Brisbane’s northern suburbs. The Building consists of a number of strata lots totally dedicated to medical tenants and users. The property comprises a two storey, 13 bed private hospital with parking for 52 vehicles and a dedicated ambulance area. The property is located in Cardiff, a suburb approximately 15km from Newcastle’s CBD. SINCE 1990, HEATHLEY HAS ACQUIRED OVER $800 MILLION OF COMMERCIAL PROPERTY ON BEHALF OF INVESTORS. HEATHLEY CURRENTLY MANAGES 15 PROPERTIES ACROSS 7 FUNDS WITH A COMBINED VALUE OF $280 MILLION. | | KEY DATES Offer Open 24 October 2014 Initial Settlement 11 November 2014 Close of Investment Period November 2016 CONTACT DETAILS For further information or if you have any questions related to the offer, please contact: John Taylor Phone – (02) 8247 7005 Mobile – 0405 448 595 Email – jtaylor@heathley.com.au Mark Howard Phone – (02) 8247 7007 Mobile – 0439 789 069 Email – mhoward@heathley.com.au | or visit our website www.heathley.com.au ABOUT HEATHLEY Heathley was established in 1977 to provide specialised managed investment services to a niche market of high income earners and high net worth individuals. Since 1990 Heathley has specialised in unlisted property syndication, and has completed 26 funds with a combined value of over $800 million. Heathley currently manages 15 commercial and industrial properties across 7 funds, with a combined value of $280 million. The Directors and senior management of Heathley have extensive experience in funds management, property and banking. This includes the assessment of passive and development property investment opportunities, and the establishment of investment funds and property finance. For further information on the group, please visit www.heathley.com.au IMPORTANT NOTICES This Fund Summary is issued by Heathley Asset Management Limited ABN 40 003 976 672, AFSL 246368 (Heathley), the proposed responsible entity of Heathley Direct Medical Fund No. 1 (Fund). The information contained in this Fund Summary is of a general nature only. It has been prepared without taking into account your particular investment objectives, personal circumstances, financial situation or needs. When making decisions in relation to your own personal circumstances and objectives, you may wish to seek independent financial advice. This Fund Summary is also not intended to be, and should not be construed in any way as, investment, legal or financial advice. This Fund Summary is not an exhaustive summary of the terms of the offer. Heathley may update the terms of the Fund from those in this Fund Summary. You must read the Product Disclosure Statement for the Fund, including the Risks section, before making a decision in relation to the Fund. Heathley does not guarantee any income or capital return from the Fund. There can be no assurance that the Fund will achieve results that are consistent with investment performance of previous investments or that the investment objectives for the Fund will be achieved. The forecast return is based on the Seed Properties. As other properties are to be acquired over the Investment Period, the actual return may vary. The forecast is calculated after fees and before tax. The forecast is based on various assumptions and the ability to achieve the forecast is subject to various risk factors. Investors should consider the assumptions and risks set out in the PDS.