Dransfield Shared O hiOwnership
Developer Opportunity May 2011
2Current State – Strata MarketCurrent State Strata Market
• Unresolved conflict between lifestyle andUnresolved conflict between lifestyle and investment
• Investment pitches have failed– Inadequate income– No capital growth
Lack of use– Lack of use
• Current oversupply in the strata title market• Latent buyer poolLatent buyer pool
– Too smart/Too poor
• Shared Regulatory hurdles now overcome
3Shared OwnershipIntroduction
• DSO Scheme is now live and market ready• Significant stakeholder benefits
– Hotel operator– Developer– Individual Strata Owner– Financier
• DSO scheme isP t bl– Portable
– Flexible
• High barriers to entry/competitionLi– Licence
– Time > 12 months
– Cost > $1m
k ll d f– Skills and resources significant
– Credibility with developers, owners and buyers
4Who is Dransfield?Who is Dransfield?• Established 1993
• Principals, partners and advisors to a full range of hotel and
resort assets
• Advise Owners, Developers, Operators and Financiers
• Multi disciplined – Development, Operations, Project Marketing,
Financing
• Over 300 hotels, over 30,000 rooms
• Australia's leading strata title project advisor
• Holder of an Australian Financial Services Licence
• Licensed Real Estate Agent
5What is Shared Ownership?p
• Typically 6-12 owners buy a share in the home entitling them to 4-Typically 6 12 owners buy a share in the home entitling them to 4
8 weeks occupancy per year
• Owners are on title as tenants in commonOwners are on title as tenants in common
• Reduced entry price and reducing ongoing maintenance costs by
more than 80%more than 80%
• Fully maintained and managed property
• Independent owners’ representation by Dransfield• Independent owners representation by Dransfield
6About Shared OwnershipAbout Shared Ownership
• Internationally well established• Internationally well established
– US over 10 years
– Europe 5 years
• Australian commencement delayed by licensing
• Australian Market is receptive to and substantial
• RCI market study identified potential of overRCI market study identified potential of over
– 470,000 households
Market size in excess of $9B– Market size in excess of $9B
7All Stakeholders Benefitf
Dev
/Fin
Op SA Owveloper
nancier
erator
Sales Agent
wner
Enhance access and growth into MLR market X XIncreased Management Revenue from MLRs (significant profit per key from servicing shared Xowners)Reduced average cost structure by sharing overheads X X XImproved individual strata owner satisfaction
Sell down part of their apartment/homeIncreased lifestyle focus
X X X XXy
Improved Developer pitchesAdditional Distribution platform to offer developersa new must have
XX
XX
Differentiation to other developers XInternal exchange for Strata Owners increases perceived value X XInternal exchange for Strata Owners increases perceived value X XHelp in gaining additional management contracts XPath to access additional listings XLess competition on this type of product X X XMethod to move high priced stock to larger market (increase potential buyers) X X
New Distribution channels X X X X
8Marketing – DSO Positioningg g
• Key Messages to DSO BuyersKey Messages to DSO Buyers
– Value for Money
– Usage rights are Clear and Transparent, set at purchase
– “Hassel Free” use – independently maintained
– Independent Scheme Management by DSO
– Real estate investment on title,
– Return of Capital and potential growth
– Quality of built product and operatorQuality of built product and operator
• Will replace some Serviced Strata Schemes
9Marketing - Distributiong
• Focus on direct marketingFocus on direct marketing
• Support from mainstream advertising
• Highly active campaigning multiple programs• Highly active campaigning, multiple programs
• Substantial On line/electronic mix
• Allow 5 10% (excluding commission) and add• Allow 5-10% (excluding commission) and add to price, can cope with double this cost
• Co-ordinated with whole ownership campaign• Co-ordinated with whole ownership campaign
• Drive clients to site
10Market Friendly Offeringy g
• Initial term of up to ten years, with continued terms available via t i 100% t th towners agreement, can require 100% agreement or the property
sold as a whole.
• Owners can sell share at any time, first right of refusal to other owners
• Home owners may collectively decide to sell the home at any time (>50% owner agreement)
• Dransfield may be replaced at any time as Managers (>50% owner agreement)
11Sales Process
• Sales ProcessSales Process– Authorised representatives required
– PDS required
/– DSO can be active/passive in process
– Can integrate with whole sales process
• ReferralsReferrals– Scope to offer quality incentives
– Referrer and purchaser both rewarded
12Marketing – Sample Collateralg p
13Shared Ownership vs.
TimeshareTimeshare• 140,000 timeshare owners in Australia and growing
• Shared Ownership and timeshare present different opportunities for different people in Australia
• Timeshare is designed to accommodate the pre-purchase of a holiday in a range of resorts or serviced apartments. Most families purchase about a week of time for about $20k
• Key Differences– Timeshare owners usually do not have any direct interest on title
– There is limited possibility of capital appreciation in timeshare
– There is typically a lower quality of accommodation in a Time share scheme
Timeshare has less transparency in costs and the value proposition– Timeshare has less transparency in costs and the value proposition
– Capacity to on-sell more difficult
– Premium applied to underlying property value in excess of 75% for time share
1414
15Website Capabilityp y
• DSO utilises a Flexible website system with the SO ut ses a e b e ebs te syste t t efollowing features
– Internal content management
– Google analytics
– Search Engine Marketing
EDM ith n l tic– EDMs with analytics
– Database Management (project centric)
– Cloud storageCloud storage
– Individual owner pages
• Additional portals/projects added at low cost and p p jmanaged centrally
16Legal Environmentg
• Shared ownership scheme is a ManagedShared ownership scheme is a Managed Investment Scheme
• Regulated under the Corporations Act 2001Regulated under the Corporations Act 2001
• DMSL owns of a fully compliant scheme (1 Yr Process, high cost) , g )
• One of only 2 currently registered schemes in Australia
• 1 to 3 months to establish additional scheme
17Timeline of DSOf
Live Scheme17 Months
AFSL variation approved
Project Agreement with
Mirvac Development
MLA
Launch Site
Identified(Sep’09)
Appointment of AR’s
Website Developer selected
Compliance Committee
Magenta Shores
Due Diligence
Dransfield Shared Website
Live
MLA with
Mirvac Hotels
Begin research
of Fractional
Jul’09 Feb’11Jan’10 Apr’10 Oct’10Jul’10 Jan’11
Initial Ad ti i
Owner Management
Preliminary PDS 1st
Nov’10
Magenta
Sep’10 Dec’10
Advertising for
MSSO
Management Software Selected
legal advice
PDS Commenced
Scheme Constitution approved
ASIC
DSO on site @
Magenta
PDS in Use
Commit to Legal Process(6-9 months)
Sale of Magenta
Announced
Website Live
18Magenta Shoresg
• 1/6th golf home $249k Beach home• 1/6 golf home $249k, Beach home $495k
High levels of initial response• High levels of initial response
• Improved response over whole hiownership
• On hold pending Sale by Mirvac, could be reactivated for spring 2011
• DHR engaged by Mirvac in marketing g g y gwhole site
19Magenta Response to dateg p
• Soft Launched November 2010
• Web hits 4 times that of similar whole ownership project
• Web hits 100% up in January 2011 on December 2010
• 100 expressions of interest in test period (target 30)• 100 expressions of interest in test period (target 30)
• 40 remained active as at 25 January 2011 (Mirvac sale announced)
• 3 contracts issued (target one exchange for test period)
l l d d d hd l• Extremely limited spend and campaigning prior to withdrawal
• PDS and offering withdrawn following Mirvac’s sale announcement
• Significant live experience gained in Australian market
20DSO Roles
• One stop shop orOne stop shop, or
• Scheme establishment
• Scheme operation• Scheme operation
• Owner management
• Project marketing• Project marketing
• Sales role or training existing team
Online sol tions• Online solutions
• Branding and collateral development
21Pricing Breakdowng
House Type Up-Scale Entry PriceList Price
yp p y
Current List Price $1,400,000 $275,000House Extras $30,000 $25,000Furniture $110,000 $50,000Total List Price $1,540,000 $350,000Premium (%)
Scheme 15% $231,000 22.5% $52,500Marketing 5% $77,000 7.5% $17,500Marketing 5% $77,000 7.5% $17,500
Total Premium 20% $308,000 $70,000GST (may not be applicable) 10% $30,800 $7,000Shared Ownership Price $1,878,800 $427,000
Price per Share6 Shares 6 $313,133 $71,1678 Shares 8 $234,850 $53,37512 Shares 12 $156,567 $35,583
Price per Share
22Site Establishment Ti i & F diTiming & Funding
Detail Time Cost
Stage 1 Scoping Study 3-6 Weeks $50k
Stage 2 Scheme Implementation
• Develop scheme detail
• Prepare for market
2-3 Months $150-$250k
• Prepare for market
Stage 3 Initial Test Marketing 2-3 Months $100-$300k
Assumes
• Furnished display apartment
23Next Stepsp
• DSO to review project for market acceptance
• Approval of scoping studyApproval of scoping study