General Risks

Liquidity
Property is an inherently long-term investment and cannot be easily sold. A Property may be sold at a loss, in which case the Fund may experiences a loss of available capital and liquidity and investors may not be able to recover the full amount of their original investment.

Tenant Default or Non-Renewal
The tenants of any tenanted Properties acquired for the Fund, may fail to pay the rental and outgoings (defaulting) which may affect projected returns, or may not renew lease arrangements and new tenants may be required. Costs, including lease incentives, may be required on re-leasing and there may be extended periods where a tenancy does not earn income.

Interest
Interest rates may increase and increase the mortgage repayments due from the Fund to its lenders. A portion of the Properties in the Fund will be funded by interest-bearing borrowings, and the interest expense is a material expense for the Fund. Changes to bank loan terms and conditions, for example in respect to interest rates, bank margins, loan to value ratios, or principal repayment requirements, either as a result of bank policy changes or the requirement that the bank comply with changes to external regulatory requirements, may affect the Fund.

Damage or Destruction
A Property may be destroyed, and the event may not be adequately covered by insurance.
Transfer of Units – While Units are transferable by investors, a buyer for the Units may be difficult to find, and investors may not be able to realise their investments in the Fund before the Properties are sold.

Forecasts
Actual results and returns may be different to the forecasts anticipated by the General Partner.
Since anticipated events frequently do not occur as expected, the variation may be significant and material.

Specific Risks

Capital Depreciation
There is no guarantee of capital gain on the Properties or any individual Property acquired by the Fund. The Properties may depreciate in value (or appreciate slower than anticipated by the General Partner) due to market or other factors.

Capital Expenditure
Capital expenditure for the Properties or any individual Property acquired by the Fund may be more than budgeted. Significant additional capital expenditure in excess of forecast amounts may be required for a number of reasons, including undertaking structural repairs or related work to bring a Property up to a designated standard, or to meet new requirements resulting from changes to current regulations or standards.

Timeframe / Delays
Changes in the timeframe and delays in achieving an appropriate value-add component in respect of the Properties or any individual Property may delay or affect the realisation of capital growth.

Change of Law or Plans by Local Authority
Changes in laws or regulations (including in relation to property, tax or tenancies) or the plans of a local authority may impact the Fund and its ability to realise capital growth in respect of the Properties or any individual Property.

Failure to Obtain Resource Consent, Subdivision Approval or Title
A failure to obtain any resource consent, sub- division approval or title for the Properties or any individual Property may delay or prevent anticipated capital growth.

Improvement Potential Cannot be Extracted
An inability to fully complete a value-add component or extract improvement potential for the Properties or any individual Property may delay, prevent or reduce anticipated capital growth.

Risk Spectrum

The General Partner anticipates that value-add Property opportunities for the Fund will fall broadly within the Risk Spectrum below.In building a diversified Property portfolio, the General Partner aims to spread the risk of the Fund across multiple categories of Property investment.