LAKE HUME RESORT
REFURBISHED COTTAGES AT
NUMBER 6 SPOTTED GUM DRIVE
& NUMBERS 19,24,25 AND 26 BRUSH BOX ST.

KEY FACT SHEET
WHAT IS BEING OFFERED?

Holiday cottages on individual lots with their own Torrens Title to private investors.
There are four dual key cottages and one four-bedroom cottage being sold as shown on the attached site plan. This will finalise the sale of all dwellings in this subdivision. Twenty – one other dwellings have previously been sold.

After settlement at prices ranging from $150,000 to $160,000 the cottages are to be refurbished to the standard as presented in the dual key cottage at number 20 Brush Box St. Or the four bedroom cottage at number 7 Spotted Gum Drive. The balance of payments are then made at completion of these works.

The purchaser has a few options to obtain revenue from these investment cottages:
1/ Cottages can be purchased with a five year lease back arrangement with a guaranteed 6% return on the purchase price with the Resort paying the outgoings.

2/ Cottages can be let out with the Resort charging a commission and service charge in accordance with a letting agreement for periods as instructed by the purchaser

3/ The purchaser can use their cottage for their holiday cottage and let it either independently or through the Resort as they wish.

In the lease period the owners have free use of their cottages and Resort facilities for certain pre arranged periods. If this is during the peak period, the guaranteed lease payments will be reduced.

WHAT DO YOU PURCHASE?
A dual key or four bedroom cottage to a similar finished standard as exists with number 20 Brush Box St. or number 7 Spotted Gum Drive.

Improvements include new plumbing fixtures and fittings, new light fittings, two reverse cycle split system (existing remains), insulated ceilings, new curtains and new kitchen. A deck and bay window is also constructed.

Extent of Furniture and Fittings are as can be inspected in existing cottages and include new fridge and stove, two new televisions, existing lounge suite, and existing dining and outdoor furniture settings. Cutlery, artwork and linen and loose fittings will be supplied and replaced free of charge by the Resort if the lease option is taken.

The cottages are purchased in their existing state for between $150,000 to $160,000. Lease payments at 6% of the initial purchase price commence on settlement. Lake Hume Resort up grade your cottage to the existing standards of the dual key or four bedroom cottage. The balance of the funds are paid on completion and the new lease payments based on the final amount commence.

WHAT DO THESE INVESTMENT COTTAGES COST?
Please find attached our Price List for the limited number of three and four-bedroom cottages that are available. The purchase price for the dual key cottages 24,25 is $239,000 and cottages 19 and 26 is $249,000. These including furnishings. The four bedroom cottage is for sale for $189,000.00. Lease back payments start at the initial settlement. This schedule also shows the extent of surrounding land that is included in the purchase of the cottage. Refer to the Furniture and Fittings schedules for the extent of these items that are included in the sale.

Depreciation schedules for both the new building works and fittings to enable maximum taxation benefits to be gained are supplied on settlement.

WHAT RENT CAN I EXPECT TO RECEIVE?
If you purchase a cottage under the lease back agreement you receive a guaranteed 6.0% net return on your purchase price.

For instance, a furnished four-bedroom cottage purchased for $189,000 will provide return of $11,340 per annum ($218 net per week), and a furnished dual key cottage purchased for $249,000 would provide a return of $14,940 per annum ($287 per week).

All outgoings(except sinking fund and land tax if applicable), management costs, and rates are paid by the Resort. Land Tax is only applicable if you own sufficient land in NSW to be above the taxable threshold. For the last few years the sinking fund has averaged $160.00 per annum. Funds have accumulated to approximately $15,000.00.

Alternatively, if you require a more flexible arrangement we provide an option for your investment property to be let out by the management of Lake Hume Resort on a commission basis of 19%.

Other fees for cleaning, and minor maintenance, linen and guest requisites etc. would be charged at 20% of gross revenue. With the letting agreement all other costs such as rates, electricity, insurances, body corporate fees etc. are the responsibility of the owner. With a letting agreement the returns are not guaranteed and the revenue will vary due to supply and demand and the owner has a greater flexibility in their use.

WHAT EXACTLY IS GUARANTEED NET RETURN AND WHAT ARE MY OUTGOINGS IF I OPT FOR THE LEASEBACK ARRANGEMENT?
Lake Hume Resort pays your rent at a fixed amount which is 6% of the purchase price irrespective of whether you cottages is occupied or not. These amounts are adjusted by CPI every year. Your tenant, Lake Hume Resort, pays the outgoings which means that your return is not reduced by items such as council rates, insurances, electricity, cleaning, grounds, minor maintenance, and body corporate fees (excluding sinking fund).

Your rental is guaranteed by Batava Pty. Ltd. Batava has owned Lake Hume Resort for in excess of fifteen years. In most investment properties, your rental income is dependent on occupancy and market demands, plus you may also have considerable administrative and upkeep costs along with difficulties with tenants.

At Lake Hume Resort using the lease agreement these are looked after by the professional management team with your return being remitted to you on a quarterly basis. Each year your rental income will be adjusted by a formula tied to the CPI index allowing you to get the benefit of tariff increases.

Your investment and capital growth potential is also protected by a registered Management Statement that ensures a certain standard of development and improvements at Lake Hume Resort. This is similar to a convenant and would form part of the contract of sale.

ARE THERE OTHER BENEFITS WHEN I PURCHASE A COTTAGE AT LAKE HUME RESORT?
Apart from the guaranteed return if you choose the lease back option, you will also have free use of your cottage for seven weekends and one seven day period in non peak times. This free use of your cottage is based on booking no further than four weeks in advance. However, if your cottage is already booked within this four week period, Lake Hume Resort will provide an alternative cottage subject to availability.

Use in peak periods and in excess of this time will be charged at normal tariff. These costs will be deducted from your rental revenue. This is not timeshare. Like buying a residential investment property for rental, you are buying an investment property which you own and can sell at any stage.

However, unlike most residential properties, you have the option to purchase an investment property on a guaranteed return basis, plus you will have the privileges to use your property at certain periods free of charge. You will also have the benefit of using the Resort Facilities, as part of the common property is the swimming pool.

Like any residential property you can sell it at any time you like, but unlike your residential property you do not have to have your tenant vacate for settlement if needed. Minor maintenance and grounds upkeep are also paid for by the Resort in the leaseback arrangement.

Naturally, no matter what option you choose it is in your tenant’s interest (Lake Hume Resort) to keep the standard as high as possible to maintain star rating and ensure continued growth, customer satisfaction and success for all involved.

WHY IS LAKE HUME RESORT UNDERTAKING THIS INITIATIVE?
As with the development and sale of the new Villas, the part sale of the Resort has always been on the Master Plan for the owners of the Resort (Batava). Since purchasing the Resort in 1995 the owners have concentrated on developing the Resort into a major regional conference center and holiday resort Several years ago the Caravan Park and the shop was sold to concentrate on this objective.

The establishment of the hotel and function center which cost in excess of $2,000,000 has created a need for both higher standard and more accommodation. The continuing success and growth of this establishment is very much dependent on attracting more inhouse guests, as food and beverage, function and conference revenue now exceeds accommodation revenue. The trends in tourism show very distinctly that customers wish to have a higher standard of accommodation with more facilities than they did a decade ago.

Both the new villas and the upgrade of these cottages will assist in the continued growth of Lake Hume Resort, especially in the Conference and Function market. This concept of private investors owning units in Resorts and Holiday Villages is quite common in tourism regions.

This further development is based on several other successful projects in New South Wales, where these businesses have grown significantly because individual dwellings have been sold to investors who have supported “their” Resort. In these Resorts, the businesses have grown significantly faster than if owned by one organization.

In effect, the owners of Lake Hume Resort are offering a limited number of private investors to become a part of the Resort and reap the benefits and security of owning freehold land around Lake Hume, with advantages and facilities of a resort environment.

In similar projects these investors have become “ambassadors” for the Resort. These individual owners have assisted in bringing additional visitors and more business to “their” Resort through greater exposure and marketing initiatives. Naturally, this has provided a mutual financial benefit to both the resort and the individual investors.

The sale of these cottages will provide further funds to accelerate our expansion plans for the Resort, introduce further customers to the Resort and provide suitable standard accommodation to meet the growing expectations of our customer base.

Note: Illustrations are for presentation purposes only. All dimensions and areas are approximate only and may vary throughout the development. All details are believed to be correct at time of issue. However, all interested parties must rely on their own enquiries and are not entitled to make any objections or claims in relation to or in reliance from information provided.