OUTLOOK STIRLING PRECINCT A CONTEXT ON BUSINESS, CULTURE, LIFESTYLE AND RESIDENTIAL

OUTLOOK STIRLING PRECINCT A CONTEXT ON BUSINESS, CULTURE, LIFESTYLE AND RESIDENTIAL The Stirling Precinct is serviced by major public transport infrastructure whilst being walking distance to the city s main business and entertainment districts, as well as offering direct access to other key metropolitan retail and employment nodes. NOVEMBER 2014 A B C D E ACCESSIBILITY Serviced by two train stations and highly serviced by buses. The Stirling Precinct is only 300 metres to 850 metres from the GPO / Pg 03 DEMOGRAPHICS A growing local population, popular among couples without children who have a higher average discretionary income / Pg 04 INFRASTRUCTURE & EMPLOYMENT Around 10,500 new jobs forecast to be created in Inner Perth between 2013 and 2018 / Pg 05 SALES ANALYSIS The median apartment price in the Stirling Catchment increased by 6.9% over the three years to August 2014 / Pg 06 RENTAL MARKET The Perth Catchment records a premium for new rental stock compared with older, existing stock / Pg 07 AN ECLECTIC AND MULTICULTURAL MIX OF RETAIL, DINING AND NIGHTLIFE IS OFFERED IN THE DISTRICT INNER PERTH HAS A PROUD CULTURAL PAST, PRESENT AND FUTURE WILLIAM STREET NORTHBRIDGE SUSTAINABLE TRANSPORT OPTIONS ABOUND IN THIS HIGHLY ACCESSIBLE SUBURB STATE THEATRE CENTRE OF WESTERN AUSTRALIA 1 POP 2 INF 3 EMP Stirling Precinct accommodates all three of the Urbis economics and research fundamentals that make a sustainable suburb Population, Infrastructure and Employment. BICYCLE AND PEDESTRIAN FRIENDLY

16 17 ACCESSIBILITY & WALKABILITY Stirling Precinct 29 19 5 28 20 KWINANA FREEWAY ESPLANADE 41 27 21 ELIZABETH QUAY 4 3 22 24 23 2 1 CROWN CASINO & PERTH STADIUM (8-10 MIN) PERTH AIRPORT (15 MIN) 15 25 14 Key Legend Retail & Dining Education 1 Myer 2 David Jones 3 Murray Street Mall 4 Hay Street Mall 5 Brookfield Place 6 King Street 7 Watertown Brand Outlet Centre 8 William Street, Northbridge 9 James Street, Northbridge 10 Perth Modern School 11 Scitech 12 Central Institute of Technology 13 Alexander Library 14 Curtin Graduate School of Business 15 Mercedes College 16 The University of Western Australia Green Space & Recreation Employment 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 Indian Ocean Royal King's Park Tennis Club Kings Park Jacob's Ladder Swan River Supreme Court Gardens Stirling Gardens City of Perth Royal Perth Hospital WorkZone (27,900 sqm office space) Perth CBD (1.6 million sqm office space) Mount Hospital QEII Medical Precinct Parliament House West Perth (420,000 sqm office space) Subiaco Culture & Entertainment 33 34 35 36 37 38 39 40 41 Subiaco Oval Perth Arena Cinema Paradiso Rooftop Movies State Theatre Centre of Western Australia Art Gallery of Western Australia WA Museum His Majesty's Theatre Perth Convention and Exhibition Centre The Stirling Precinct is the northern precinct within the suburb of Perth and is next to the metropolitan area s premier entertainment and cultural district of Northbridge, just a short walk from the Central Business District. It is serviced by two train stations and is only 300 metres to 850 metres from the GPO. The area s emerging, gentrifying profile adds to the excitement of what it will ultimately offer residents, workers and visitors. 2 URBIS STIRLING PRECINCT OUTLOOK - FOR THE EXCLUSIVE USE OF STIRLING CAPITAL

18 31 32 OSBORNE PARK OFFICE MARKET (15 MIN) 33 WEST LEEDERVILLE 10 30 MITCHELL FREEWAY 7 CITY WEST 11 34 40 6 PERTH UNDERGROUND PERTH CITY LINK 36 9 35 8 37 PERTH 38 13 39 12 STIRLING PRECINCT 26 108 NIB STADIUM (8-10 MIN) McIVER URBIS STIRLING PRECINCT OUTLOOK - FOR THE EXCLUSIVE USE OF STIRLING CAPITAL 3

LIFESTYLE & DEMOGRAPHICS The lifestyle amenity within the Stirling Precinct Catchment has positioned it as one of the metropolitan area s most dynamic and exciting urban addresses. THE PERTH LIFESTYLE Retail Numerous retail strips exist in Perth, including the Hay and Murray Street Malls, King Street and Northbridge s William, James, and Beaufort Streets. North of the railway, boutiques and local artisans create a unique shopping experience. Perth CBD Perth s Central Business District (CBD) comprises around 1.62 million sqm of office space. Assuming an average workspace ratio of 18 sqm, the market could supply around 90,000 office jobs. The retail and hospitality sectors provide additional job opportunities. Food and Beverage Food and beverage options are varied, from high-end premises at Brookfield Place, to celebrity chef Jamie Oliver s Italian restaurant,to less formal eateries in Northbridge. The choices are highly multicultural, serving dishes from every corner of the world. Culture Northbridge forms Perth s cultural heart, boasting venues, attractions and schools including the Perth Institute of Contemporary Arts, Art Gallery of Western Australia, State Theatre Centre of Western Australia, Western Australian Museum and Cinema Paradiso. Nightlife Punters are offered an array of bars, nightclubs and live music venues in Northbridge. Furthermore, according to Pollstar, nearby Perth Arena was ranked 22 in the world in 2013 for number of ticket sales. The venue staged seven of the world s top ten music tours that year. Swan River Recreational opportunities abound on and along the Swan River. High-quality pedestrian and cycle paths run along the River, also facilitating opportunities to sail and fish. A Rottnest Express ferry terminal is located at Barrack Street s Pier Two. AGE DISTRIBUTION - 2011 PROPORTION OF POPULATION 21% 18% 15% 12% 9% 6% 3% 0% STIRLING PRECINCT CATCHMENT GREATER PERTH 00-04 05-09 10-14 15-19 20-24 25-29 30-34 35-39 40-44 45-49 50-54 55-59 60-64 65-69 70-74 75-79 80-84 85+ AGE DISTRIBUTION Prepared by Urbis, Source: ABS Census 2011 PERTH CATCHMENT POPULATION PROJECTIONS PROJECTED POPULATION 50,000 40,000 30,000 20,000 10,000 0 2014 2015 2016 2017 2018 YEAR Prepared by Urbis, Source: Department of Planning 2012 - Band C (median forecast) 2019 2020 2021 2022 2023 2024 2025 2026 POPULATION & DEMOGRAPHICS The broader Stirling Precinct Catchment is the City of Perth (LGA) which saw population increase by 5,388 residents (20% growth) between 2008 and 2013, or 1,078 residents per annum. Perth ranked second behind only Melbourne (24% growth) as the second fastest growing capital city Local Government Area over this period. According to the Department of Planning, the City of Perth is forecast to record annual population growth of 4.5% to 5.5% per annum and a total of approximately 20,100 people between 2014 and 2026. Rising levels of demand to live near the city and new development in East Perth and Perth (particularly north of the railway line) are expected to form the key drivers of this population growth within the Catchment. To accommodate this population growth will require over 10,000 new dwellings by 2026. With activity fostered by the young student and professional demographic, 48% of the Catchment s residents are aged between 20 and 34 years (compared with 22% across the metropolitan area). Home to a large proportion of couple families without children, at 71% of households, these residents place a greater emphasis on lifestyle and enjoy a higher level of discretionary income. The income distribution for the Catchment highlights a higher proportion of residents in top tier brackets, with 10% earning between $1,500 and $1,999 per week and 17% earning over $2,000 per week. This strong income profile can be credited to a high proportion of professional residents in the Catchment, with 54% of employed persons classified as professionals or managers. These statistics show that the area will experience particular demand for apartments from Generation Y renters and owner-occupiers. Inner urban areas, in particular, are residential markets of choice for Generation Y. 4 URBIS STIRLING PRECINCT OUTLOOK - FOR THE EXCLUSIVE USE OF STIRLING CAPITAL

Major drawcards for the inner Perth area will be Elizabeth Quay and City Link to be enjoyed by residents, workers and visitors alike. INFRASTRUCTURE & EMPLOYMENT INFRASTRUCTURE INVESTMENT Perth City Link Linking the CBD and Northbridge, City Link is Australia s largest TOD (transport orientated development) project which will ultimately comprise around 1,900 apartments providing a home to 3,060 people. It will also create 244,000 square metres of office/retail space providing opportunities for 13,500 new workers. Another major component has been putting the Fremantle railway line below ground. The government is investing $752 million in the precinct. Elizabeth Quay Linking the Swan River and CBD, Elizabeth Quay is a $2.6 billion project which will comprise around 800 apartments, 400 hotel rooms, 225,000 sqm of commercial space (opportunities for 10,000 workers) and an impressive public realm upon completion (staged, from 2015). Another major component has been the creation of a sizeable river inlet. The government is investing $423 million in the precinct and is expecting $2.2 billion of private sector investment. New Museum Located within the Perth Cultural Centre, the $428 million finished product (delivery in 2020) will allow curators to present innovative and contemporary displays. The New Museum site will be around 23,000 sqm which will include a new building, the refurbished existing heritage buildings and public space. The expanded floor space will enable an increased number of international exhibitions to be accommodated. EMPLOYMENT FORECASTS According to projections prepared by the Australian Department of Employment (2013), Inner Perth (including the Perth CBD and fringe areas) is forecast to record employment growth of 10,500 jobs, or 10.5%, between 2013 and 2018. The key contributing sectors and their level of growth will be Professional, Scientific and Technical Services (13.3%), Health Care and Social Assistance (14.3%) and Education and Training (12.5%). TOTAL CURRENT EMPLOYMENT EST. 2018 FORECAST GROWTH TO 2018 (#) INNER PERTH EMPLOYMENT GROWTH 10,500 99,600 110,100 EMPLOYMENT NODES WITHIN OR NEAR THE STIRLING PRICINCT Perth s Central Business District Perth s CBD offers diverse employment opportunities. Employment sectors include White Collar (1.6 million sqm of office accommodation), Retail and Food and Beverage (Hay, Murray, Barrack, King and William Streets), Education (Central Institute of Technology, Curtin Graduate School of Business, Mercedes College), Health (Royal Perth Hospital, Mount Hospital) and Tourism (hotels, Perth Convention and Exhibition Centre). West Perth West Perth comprises 422,000 sqm of office space, in addition to government (Dumas House, Parliament House), residential, retail (Hay Street, Watertown) and short-stay accommodation uses. Among office tenants, the market is particularly popular among small to mid-sized mining and oil and gas companies. Like the Perth CBD, it is well-serviced by public transport including the free Central Area Transit buses. Queen Elizabeth II Medical Centre According to the QEII Medical Centre Trust s 2013/14 Annual Report, the precinct employs 8,000 people. This number will grow in the near future, following the completion of the Children s Hospital, Ronald McDonald House, Mental Health Unit and Neuroscience Research Facility. The precinct is benefitting from state government health sector framework which promotes the centralisation of services in key locations. Perth s Eastern Industrial Market Perth s eastern industrial market is located south of the Swan River, north of the Canning River and largely surrounds Perth Airport. The industrial markets proximity to the Perth CBD, Perth Airport, major regional and interstate roads and railway lines makes it favoured among tenants related to transport and logistics. Historically home to larger-scale construction projects, including the largest amount of new metropolitan supply over the last ten years. URBIS STIRLING PRECINCT OUTLOOK - FOR THE EXCLUSIVE USE OF STIRLING CAPITAL 5

SALES ANALYSIS Northbridge will be a big beneficiary of the major urban renewal and infrastructure projects that which are currently under way within the City of Perth The broader Stirling Precinct Catchment (comprising the City of Perth LGA) is one of the metropolitan area s premium residential markets, bordered by the Swan River, Kings Park, the soughtafter western suburbs and trendy inner northern fringe suburbs. The Catchment was one of the first to embrace the benefits and lifestyle of low maintenance inner city living, with 88% of dwellings classified as apartments. With a long history of apartment development in the area, the Perth Catchment is an established market enjoying strong ongoing demand. The remaining 2% of single detached dwellings and 8% of semi-detached or townhouse dwellings in the Catchment are therefore considered a limited commodity, and command a strong premium on top of their inner city price points. The median house price in June 2014 was $823,000, based on 95 settled sales over the preceding 12 months. The strong median house price sets a benchmark for the Catchment s apartment market, where prices for apartments/units are 23% higher than metropolitan Perth s equivalent price. The median apartment price in the City of Perth increased by 7.2% over the three years to June 2014 Apartments in the City of Perth recorded a median price of $545,000 over the 12 months to June 2014, based on 1,037 settlements. This reflects stable prices over the last 12 months, three-yearly annual growth of 7.2% and five-year growth of 20% per annum. Apartments in the Perth Catchment have historically shown consistent and strong price growth since the early 2000s, with the median sale price increasing by 6.7% per annum over the preceding decade, only slightly below the corresponding 8.2% recorded for the metropolitan area. The slightly lower growth in apartment prices in the City of Perth is partially offset by higher yields as shown in the rental analysis. Moving forward, this proven market is soon to experience further transformation, with a number of new developments to enter the market and particularly connect precincts north and south of the railway line. This will greatly enhance the urban benefit for residents and those who visit this vibrant and diverse precinct. The liveability and vibrancy of the City will be further enhanced by the major re-development projects of Perth City Link and Elizabeth Quay. Importantly for the Stirling Street Precinct these developments will greatly enhance the north south connectivity of the city. PERTH CATCHMENT KEY STATISTICS JUNE 2014 MEDIAN ANNUAL PRICE GROWTH APARTMENTS JUNE 2004-2014 $540,000 Metropolitan Perth median house price 8.2% 6.7% Metropolitan Perth Median Price Growth City of Perth Median Price Growth $823,500 Stirling St Catchment median house price Prepared by Urbis, Source: RPData Suburb ScoreCard AVERAGE HOLD PERIOD $440,000 Metropolitan Perth median unit price Metropolitan Perth 8.6 years City of Perth 8.0 years $545,000 Stirling St Catchment median unit price 9.2 years 6.2 years Prepared by Urbis, Source: RPData Suburb ScoreCard Prepared by Urbis, Source: RPData Suburb ScoreCard 6 URBIS STIRLING PRECINCT OUTLOOK - FOR THE EXCLUSIVE USE OF STIRLING CAPITAL

Perth rental yields are recording a premium over those in the wider metropolitan area RENTAL MARKET The suburbs within the City of Perth all show a premium for apartment/unit rents compared to the Greater Perth median rent. The Stirling Precinct is within the suburb of Perth which is showing the greatest premium with median rents of $575 per week. Being next to Northbridge, the rents in the Stirling Precinct also follow Northbridge s rents which are lower than other suburbs in the City of Perth but still above the median for Perth. As the Stirling Precinct sees further redevelopment and becomes a more attractive precinct, the rents are expected to rise. An analysis of new and near-new apartments within the Catchment provides a more appropriate benchmark for new apartments. As at November 2014 for apartments being advertised for rent, premiums of 43.9% for two bedroom apartments and a lower premium of 4.8% for one bedroom apartments were seen compared with older established stock. The weekly premium for apartments within the Catchment highlights the value attached to location, lifestyle and quality. As more supply is added to the inner city, renters in the area have more choice and are choosing to upgrade to more modern buildings. The large difference in rents for two bedroom apartments is reflective of this. During the recent mining boom, inner city rents were pushed up considerably by strong corporate demand. Rents have now softened and are coming back to more sustainable longer term levels. According to RPData, all suburbs within the City of Perth LGA recorded rental declines over the 12 months to August 2014. The declines in rents ranged from 13.8% in East Perth (most influenced by corporate demand) to 5.0% in Northbridge. West Perth (8.3%) was less influenced by corporate activity and the mining boom. MEDIAN ASKING RENTS 12 MONTHS TO JUNE 2014 Greater Perth Northbridge West Perth East Perth Perth (Including Stirling Precinct) $400 $420 $440 $460 $480 $500 MEDIAN ASKING RENT Prepared by Urbis, Source: RPData Suburb ScoreCard $520 RENTAL PREMIUM: NEW VERSUS EXISTING $540 Prepared by Urbis, Source: RPData Suburb ScoreCard August 2014 RENTAL YIELDS CATCHMENT SUBURBS (12 MONTHS TO AUGUST 2014) $560 (12 MONTHS) NEW AND NEAR NEW APARTMENTS IN CATCHMENT SUBURBS ESTABLISHED APARTMENTS IN CATCHMENT SUBURBS $440 ONE BED $600 $420 $420 TWO BED $580 $600 From a rental return aspect, the Perth suburb showed an indicative gross rental yield of 5.9% return for investors for the 12 months to June 2014. This was above the median for greater Perth (5.2%) and higher than the other Catchment suburbs. It highlights that whilst rents have softened, investors are still obtaining attractive returns from inner city apartments. 5.0-5.4% 5.9% Other Catchment Suburbs CITY OF PERTH 5.2% Greater Perth URBIS STIRLING PRECINCT OUTLOOK - FOR THE EXCLUSIVE USE OF STIRLING CAPITAL 7

PERTH Level 1, 55 St. Georges Tce Perth WA 6000 08 9346 0500 This publication is prepared on the instruction of Stirling Capital and is not suitable for use other than by the party to whom it is addressed. As the publication involves projections and assumptions it can be affected by a number of unforeseen variables. The forecasts and assumptions are a prediction and whilst Urbis has made every effect to ensure that the forecasts and assumptions are based on reasonable information, they may be affected by assumptions that do not necessarily eventuate or by know or unknown risks and uncertainties. It should be noted that past performance is not necessarily a reliable indication of future performance. The information in the publication does not represent financial advice and should not be regarded as such. It has been prepared without taking into account your financial situation or investment objectives. You should consider the appropriateness of the information in regards to your current financial situation or needs. Urbis accepts no responsibility for the accuracy or completeness of any such material. The information is subject to change without notice and Urbis is under no obligation to update the information or correct any assumptions which may change over time. This study has been prepared for the sole use of Stirling Capital and is not to be relied upon by any third party without specific approval from Urbis. This publication is subject to copyright. Except as permitted under the Copyright Act 1968, no part of it may, in any form or by any means (electronic, mechanical, photocopying, recording or otherwise) be reproduced, stored in a retrievals system or transmitted without prior written permission. Enquires should be addressed to the publishers.