SDOT2 Product Disclosure Statement - Stockland

stockland.com.au

SDOT2 Product Disclosure Statement - Stockland

Optus at

Macquarie Park

Stockland Direct Office Trust No. 2

ARSN 115 017 466

Product Disclosure Statement

Stockland Funds Management Limited

ABN 86 078 081 722, AFS Licence Number 241188

Responsible Entity of Stockland Direct Office Trust No. 2

Issue date: 27 July 2005

Stockland I Shopping Centres I Commercial & Industrial I Residential Communities I Apartments I Hotels I Unlisted Property Funds I


Important

Notices

Product Disclosure Statement

This Product Disclosure Statement (PDS) relates to the offer of

85,867,000 Units at a price of $1.00 each.

This is an important document that needs your attention. If you

are in any doubt as to how to interpret or deal with it, consult

your financial adviser.

Issuer of this PDS

Stockland Funds Management Limited ABN 86 078 081 722,

AFS Licence Number 241188 is the issuer of this PDS and the

seller of the Units offered pursuant to this PDS.

Responsible Entity

Stockland Funds Management Limited ABN 86 078 081 722,

AFS Licence Number 241188 is the responsible entity of

Stockland Direct Office Trust No. 2 ARSN 115 017 466 (Trust).

Underwriters, Financier and Limited Liquidity Facility provider

Westpac Banking Corporation ABN 33 007 457 141, AFS Licence

Number 233714 is the Underwriter of 85% of the Units offered

pursuant to this PDS. It is also the Financier and Limited

Liquidity Facility provider.

Stockland Trust Management Limited ABN 86 001 900 741, AFS

Licence Number 241190 as responsible entity of Stockland Trust

ARSN 092 897 348 is the Underwriter of the remaining 15% of

the Units offered pursuant to this PDS.

Property manager

Stockland Property Management Pty Limited

ABN 22 000 059 398.

APIR Product Identification Code

STK0003AU

Important information

This PDS is dated 27 July 2005. This PDS is not required to be

lodged with ASIC. ASIC takes no responsibility for the contents

of this PDS. Applicants should only rely on the information in this

PDS.

Electronic PDS

This PDS may be viewed online on Stockland’s website at

www.stockland.com.au/unlistedpropertyfunds or on Westpac’s

website at www.westpac.com.au/structuredinvestments.

Persons who access an electronic version of this PDS should

ensure that they download and read the entire PDS.

A paper copy of this PDS is available free of charge to any

person in Australia before the Closing Date of the Offer by

telephoning the Stockland Direct Office Trust No. 2 information

line on 1300 723 909.

Offering restrictions

The Offer is only being made to persons in Australia.

No action has been taken to register Units or otherwise permit a

public offering of Units in any jurisdiction outside of Australia.

This PDS does not constitute an offer or invitation in any place in

which, or to any person to whom, it would not be lawful to make

such an offer or invitation.

The distribution of this PDS in jurisdictions outside Australia may

be restricted by law and persons who come into possession of it

who are not in Australia should seek advice on and observe any

such restrictions. Any failure to comply with such restrictions

may constitute a violation of applicable securities laws.

Glossary

The Glossary in Section 16 defines key terms used.

Disclaimers

Your investment in Units is not an investment in, or a deposit

with or other liability of Westpac Banking Corporation or any

Westpac Group company and is subject to investment and other

risks, including possible delays in repayment and loss of income

and principal invested.

None of the Responsible Entity, Stockland, any other member of

Stockland, Westpac, any other member of the Westpac Group,

Permanent Trustee Company Limited or any of its related parties

or associates, Optus or SingTel Optus Pty Limited gives any

guarantee or assurance as to the performance of the Trust or the

repayment of capital from the Trust or any particular rate of

return (other than as disclosed in Section 7.7.3). Refer to Section

7.7 for guarantees and indemnities provided by Stockland or

Stockland related entities until Lease Commencement.

Neither Optus nor SingTel Optus Pty Limited have been involved

in the preparation of this PDS. They have not authorised or

caused the issue of the PDS and do not make, or purport to

make, any statement in the PDS.

Entities related to Stockland may invest in, lend to or provide

other services to the Trust. Applicants should note the disclosure

of Stockland’s involvement set out in Section 7.2.

Applicants should also note the disclosure of Westpac's various

roles and interests in transactions associated with or incidental

to the Offer. Details of these roles and interests are set out in

Sections 2.2, 3.2, 3.7 and 4. When dealing with Westpac,

Investors should note that Westpac has adopted the 2004

version of the Code of Banking Practice. This code sets

standards of good banking practice that Westpac follows in

dealing with its individual and small business customers and

their guarantors.

The information contained in this PDS is not financial product

advice. This PDS has been prepared without reference to your

investment objectives, financial situation and particular needs. It

is important you read this PDS in its entirety before making a

decision whether to invest. If you are in any doubt, you should

consult your broker or financial or other professional adviser.

Up to date information

Information relating to the Offer that is not materially adverse

may change from time to time. This information may be updated

and made available at www.stockland.com.au/unlistedpropertyfunds

or by contacting the Stockland Direct Office Trust No. 2

information line by telephone on 1300 723 909. A paper copy of

any updated information will be available free on request. The

Responsible Entity recommends that Applicants review any such

additional material before making a decision whether to acquire

Units. If there is any material adverse change, a supplementary

product disclosure statement will be issued.

Master trusts or wrap accounts

SFML authorises the use of this PDS as disclosure to Investors

who access the Units through an IDPS or IDPS-like scheme

(which may be referred to as a master trust or wrap account) or

a nominee or custody service (together, master trusts or wrap

accounts). Those Investors may rely on this PDS.

People who invest in the Units through a master trust or wrap

account do not become direct Investors. The operator or

custodian of the master trust or wrap account will be recorded

as the Investor in the register of Instalment Receipts and will be

the person who exercises the rights and receives the benefits of

an Investor. Reports and documentation relating to the Trust will

be sent to the operator or custodian.

If Investors invest through a master trust or wrap account, they

may be subject to different conditions from those set out in this

PDS, particularly in relation to:

- fees and expenses;

- cut off times, such as for transfer of Instalment Receipts;

- distribution calculations and timing of distributions; and

- payment of interest on Application Monies.

Investors in master trusts or wrap accounts should contact their

adviser or operator for queries relating to their investment.

Pictures in this PDS

All pictures in this PDS (including on the cover of this PDS) are

an artist’s impression of the proposed Buildings to be

constructed on the Property in which the Trust will have a 49%

indirect interest.


Dear Applicant

On behalf of Stockland Funds Management Limited, it is my pleasure to invite you to acquire Units in Stockland

Direct Office Trust No. 2 (Trust).

The Trust provides Applicants with the opportunity to gain exposure to a new commercial office campus which is

currently under construction in Macquarie Park, Sydney, and which will be fully leased to Optus for an average

lease term of 15 years. The Property has been valued at $351.1 million assuming the Buildings were completed

on 1 July 2005 and will be owned by Macquarie Park Trust (MPT). The Trust will hold a 49% indirect interest in the

Property from Lease Commencement.

Stockland, one of Australia’s leading listed property groups, will contribute its extensive property management

expertise with the aim of maximising the financial return from the Property. Stockland Trust will provide a strong

alignment of interests with Investors by:

- indirectly owning at least 31% of the Property on Lease Commencement; and

- intending to apply to purchase 5% of the Units on equal terms and conditions with other Investors.

The Offer seeks to raise $85.867 million from Investors. Investors will pay for their Units in two instalments. The

First Instalment of $0.40 per Unit is payable on Application, and the Final Instalment of $0.60 per Unit is payable,

subject to certain conditions, in approximately eight years' time. To evidence their ownership interest Investors

will receive Instalment Receipts to be held until the Final Instalment Payment Date, at which time they will receive

fully paid Units.

Key attributes of the Offer to Investors include:

- an indirect investment through MPT in six new campus-style office buildings which are currently under

construction;

- a guarantee and indemnity from Stockland, or Stockland related entities, protecting Investors from

development risks until Lease Commencement;

- a long term lease to Optus from Lease Commencement, which is guaranteed by SingTel Optus Pty Limited,

an entity rated A+ stable by Standard & Poor’s 1 ;

- a forecast cash yield on the First Instalment equal to the floating 90-day bank bill rate, which steps up to 7.50%

per annum on Lease Commencement;

- distributions that are paid quarterly and are forecast to be 100% tax deferred during the Forecast Period to 30

June 2009;

- a Limited Liquidity Facility provided by Westpac that gives all Investors the opportunity to apply to sell a limited

number of Instalment Receipts on or after Lease Commencement, subject to conditions; and

- an Offer fully underwritten by Westpac (85%) and Stockland (15%).

These attributes should be read in conjunction with the risks identified in Section 10 of this PDS.

I encourage Applicants to read this PDS carefully and submit an Application Form as soon as possible. If you have

any enquiries about the Offer, please consult your financial adviser before making a decision whether to invest.

Yours faithfully

Robb Macnicol

Chief Executive Officer

Stockland Unlisted Property Funds

1

Section 15.10 provides further information about the ratings


Contents

01

1 Key Investment Features 3

2 Details of the Offer 9

3 The Trust 13

4 Instalment Receipts 19

5 The Property 24

6 The Leases and the Tenant 28

7 About Stockland 31

8 Financial Information 38

9 Fees 52

10 Risk Factors 58

11 Valuation Report 64

12 Financial Services Guide and Independent Accountant's Report 68

13 Taxation Report 73

14 Legal Report for Superannuation Investors 79

15 Additional Information 81

16 Glossary 94

Guide to the Application Form 99

Application Form 103

Directory

Inside back cover


02

What you

need to do

Applicants who wish to participate in the Offer need

to complete the following five steps:

1. Read

Read this PDS in full paying particular attention to the

Important Notices set out on the inside front cover of

this PDS.

2. Consider

Consider all the risk factors and other information

concerning the Units, Instalment Receipts and the

Trust in light of your own particular investment

objectives and circumstances. In particular, consider

the unlisted nature and limited liquidity of the Trust.

You may contact the Stockland Direct Office Trust No.

2 information line by telephone on 1300 723 909 if

you need more information or clarification.

3. Consult

Consult your financial, taxation or other professional

adviser before deciding whether to invest in Units and

the Trust.

Successful Applicants should clearly understand that

they take on a number of obligations including the

payment of Interest and Fees whilst the Final

Instalment remains unpaid, and payment of the Final

Instalment. Should the Trust not perform as forecast,

Investors may need to meet these obligations from

their own resources.

4. Complete

Complete the Application Form included at the back

of or accompanying this PDS. Investors should refer

to the Guide to the Application Form which is also

included at the back of this PDS.

Submit payment of the First Instalment ($0.40 per

Unit) with a signed, completed Application Form.

Payment must be made by cheque in Australian

currency. Cheques must be crossed "not negotiable"

and made payable to "Stockland Funds Management

Limited - on A/C of ".

5. Mail

Mail the completed Application Form together with

your cheque to:

Stockland Direct Office Trust No. 2 Offer

C/- Westpac Banking Corporation

Reply Paid A990

Sydney South NSW 1234.

The completed Application Form, together with your

payment must be received by no later than 5.00pm

(Sydney time) on the Closing Date, which is

scheduled for 16 September 2005.

Important dates 1

Opening Date of Offer 27 July 2005

Closing Date of Offer 16 September 2005

Final Allocation 2 27 September 2005

Issue of Investor statements 5 October 2005

First distribution to Investors 3 By 28 February 2006

Final Instalment of $0.60 per Unit 4 30 June 2013

Notes.

1. These dates are indicative only and may change.

SFML has the right to close the Offer early or

extend the Offer without notice. Applicants are

encouraged to submit their Applications as soon

as possible after the Offer opens.

2. Refer to Section 2.6 for information on the

allocation of Units.

3. The first distribution to Investors relates to the

period from Final Allocation to 31 December 2005.

4. There are a number of circumstances in which the

Final Instalment Payment Date may be

accelerated or delayed. Refer to Sections 4.4 and

4.5 for further information.

Each Application must be for a minimum of 25,000

Units with the payment of the First Instalment of

$0.40 per Unit on Application (minimum $10,000).

Applications for more than 25,000 Units must be in

multiples of 1,000 Units (additional $400 per First

Instalment).


1.

Key Investment

Features

03

The following table shows the key investment features of the Offer. The “Summary” indicates the kind of

information you can find in this PDS, but is not intended to be a complete summary. To find further information

on each “Feature” listed below, refer to the relevant Section in this PDS listed under “Section”. You should read

the whole PDS and seek any advice you need before deciding whether to invest.

Key investment features

Feature Summary Section(s)

The Offer

Offer of Units

Final Instalment

Investment

strategy

The Offer, which is the subject of this PDS, is for 85,867,000

Units issued at $1.00 each. Payment for the Units will be

made in two instalments:

- the First Instalment of $0.40 per Unit is payable on

Application; and

- the Final Instalment of $0.60 per Unit is, subject to certain

conditions, scheduled for payment on 30 June 2013.

The Security Trustee will hold legal title to the Units while the

Final Instalment remains unpaid. Investors will receive

Instalment Receipts, which they will hold until the Final

Instalment Payment Date, as evidence of their beneficial

interest in Units. Once the Final Instalment is paid, Investors

will receive fully paid Units.

Investors will not be required to pay the Final Instalment of

$0.60 per Unit until the Final Instalment Payment Date

(expected to be 30 June 2013); however, Investors will be

required to pay Interest and Fees on the Final Instalment.

The interest rate on the Final Instalment is fixed at 6.79% per

annum until 30 June 2013.

The Application Form includes undertakings from Investors to

pay the Security Interest Holder the Final Instalment on the

Final Instalment Payment Date and to pay Interest and Fees on

the Final Instalment when due. An Investor may also be liable

to pay default interest on any unpaid amount together with

recovery costs.

SFML is the Security Interest Holder; however, it is intended

that Westpac will become the Security Interest Holder shortly

after Final Allocation. The Security Interest Holder as at Lease

Commencement will be required to pay the balance of the

unpaid call on Units ($0.60 per Unit) to the Responsible Entity.

The Trust will:

- provide a loan to MPT on which the Trust will receive

interest from Final Allocation to Lease Commencement

(estimated to be 1 July 2007); and

- from Lease Commencement, hold a 49% indirect interest

in the Property which will be leased to Optus for an average

lease term of 15 years.

2.1 and 4

4 and

Application Form

2.1 and 6.2


04

1.

Key Investment

Features (cont.)

Key investment features

Feature Summary Section(s)

The Offer

Minimum

investment

Term of the Trust

Important date

Applications must be for a minimum of 25,000 Units and

thereafter in multiples of 1,000 Units. As a minimum:

- the First Instalment ($0.40 per Unit) payable on Application

is $10,000; and

- the Final Instalment ($0.60 per Unit) payable on the Final

Instalment Payment Date (scheduled for 30 June 2013,

subject to conditions) is $15,000.

A meeting of Investors is to be held prior to 31 December 2012

and Investors will vote on terminating or continuing the Trust.

Closing Date of the Offer 16 September 2005

2.3 and 4.4

3.4

2.4

Benefits

Forecast

Statements of

Distributions and

tax deferred

component of

distributions

The forecast Statements of Distributions (which are net of

Interest and Fees on the Final Instalment) for the Trust for each

of the years in the Forecast Period, assuming Lease

Commencement on 1 July 2007, are set out below:

Financial Year 2006 2007 2008 2009

Pre-tax return 90-day bank bill 7.50% 7.55%

rate (5.70% pa as (3.000 cents (3.020 cents

at 27 June 2005)* per First per First

Instalment) Instalment)

Tax deferred

component

100% 100% 100% 100%

of distributions

After Tax Return 90-day bank bill rate 12.56% # 12.61% #

(5.70% pa as (5.024 cents (5.044 cents

at 27 June 2005)* per First per First

Instalment) Instalment)

8.3 and 8.4

Distributions

# The After Tax Return is higher than the pre-tax return in

2008 and 2009 as it assumes deductions of Interest and

Fees associated with the Final Instalment are available to

Investors. The After Tax Returns are based on a marginal

rate of income tax of 48.5%.

* If the 90-day bank bill rate is 5.70% per annum, the pre-tax

return and After Tax Return will be 2.280 cents per First

Instalment.

Quarterly, paid within two months of 31 March, 30 June, 30

September and 31 December each year, the first distribution

being payable by 28 February 2006. All Interest and Fees relating

to the Final Instalment will be deducted by the Security Trustee

from Investors’ entitlement to receive gross distributions.

3.3 and 4.6


05

Key investment features

Feature Summary Section(s)

Benefits

Limited Liquidity

Facility

Limited recourse

Bank Loan and

fixed interest

rates

No development

risk

Net Tangible

Assets (NTA)

Cornerstone

investment

Underwriting

The Property

Property and

Optus Lease

The Responsible Entity has arranged for Westpac to provide a

Limited Liquidity Facility from Lease Commencement under

which Westpac will be prepared to purchase up to 1,000,000

Instalment Receipts per Quarter from Investors at a 2.5%

discount to NTA per Unit. A processing fee will apply. This

facility may be terminated by Westpac without notice to

Investors at any time and is subject to the conditions detailed

in Section 3.7.

The Trust intends to borrow $107,226,000 from the Financier for

a period of approximately eight years, with recourse solely to

the assets of the Trust (Bank Loan). This Bank Loan will be

used for the provision of:

- a loan to MPT until Lease Commencement and the

acquisition of the Trust’s Property Interest (Term Loan Facility);

- the Trust’s share of capital expenditure (Capital Expenditure

Facility); and

- cash flow management (Overdraft Facility).

The interest rates for the Term Loan Facility have been fixed at

6.37% per annum until 1 July 2007 and at 6.45% per annum

from 1 July 2007 until 30 June 2013. The Gearing Ratio is

forecast to be 60%.

The Trust has the benefit of guarantees and an indemnity from

Stockland, or Stockland related entities, until Lease

Commencement protecting Investors from development risks.

The NTA value of Units in the Trust calculated in accordance

with A-IFRS is forecast to be $0.92 per Unit on Lease

Commencement.

Stockland Trust intends to apply for 5% of the Units on the

same terms and conditions as other Investors. Following

Lease Commencement Stockland Trust intends to hold at least

31% of the ordinary units in MPT.

Westpac has underwritten the subscriptions for 85% of the

Units. Stockland Trust has underwritten the subscriptions for

the remaining 15% of Units.

Property

Optus at Macquarie Park (formerly North Ryde),

NSW.

Tenant Optus Administration Pty Limited.

Guarantor SingTel Optus Pty Limited, which is rated A+

of the stable by Standard & Poor’s (refer to Section

Optus Lease 15.10).

3.7

2.1, 3.2 and 4

7.7

8.5

2.1 and 3.1

2.2

5.2 and 6.2


06

1.

Key Investment

Features (cont.)

Key investment features

Feature Summary Section(s)

The Property

Property and

Optus Lease

Fees and

other costs

Lease term An average lease term of 15 years from Lease

remaining Commencement (estimated to be 1 July 2007

following completion of the development). There

are three separate leases each for two Buildings

with initial lease terms of 14, 15 and 16 years

respectively.

Rent and Net rent of $24.578 million per annum from

rent reviews Lease Commencement which increases by 3%

on each anniversary of the leases, excluding the

first anniversary where there is no rent review

and the sixth anniversary where there is a

market review of the rent subject to defined limits.

Partial Optus may, on the seventh anniversary of the

surrender date of Lease Commencement, surrender

Building A (approximately 18% of the total leased

area), provided that not less than 18 months’

notice is given.

Valuation $351.108 million assuming the Buildings were

completed on 1 July 2005, prepared by Jones

Lang LaSalle (NSW) Pty Limited and dated 1 July

2005. The Trust's Property Interest (49%) has

been valued at $172.043 million.

The following table shows a summary of some of the fees and

other costs (stated inclusive of GST less any input tax credits)

that may be charged to the Trust. A complete table of fees and

other costs is detailed in Section 9.

Trust Trust establishment fee of $7,165,584

establishment calculated as 4% of the value of the Trust’s

fee Property Interest, plus a services arranging fee of

$936,963 for professional adviser costs and PDS

production costs.

Management -

costs

Management fee of 0.46125% per annum of

the gross asset value of the Trust, although

the Responsible Entity intends to defer part

of this fee (refer to Section 9.2.1).

- Performance fee of between 1.025% and

2.050% of the Net Sales Proceeds if the final

distribution per Unit is greater than the

Application Price by 6% or more. Further

details are provided in Section 9.2.2.

- Reimbursable costs and expenses of

approximately 0.26% per annum on average

over the Forecast Period of the gross asset

value of the Trust.

5.2 and 6.2

9


07

Key investment features

Feature Summary Section(s)

Fees and

other costs

Withdrawal No withdrawal fee charged by the Trust, but if the

fee Limited Liquidity Facility is used, 2.5% of the

NTA per Unit for each Instalment Receipt sold

plus transaction costs and a processing fee of

$110 per parcel of Instalment Receipts.

Interest and Investors have an obligation to pay quarterly

Fees on Interest and Fees on the Final Instalment until

the Final the Final Instalment Payment Date as detailed in

Instalment Section 9.2.3 which will be deducted by the

Security Trustee from Investors’ entitlement to

receive gross distributions. The Financial

Forecasts are calculated after deducting any

Interest and Fees relating to the Final Instalment.

9

Risks

Key risks specific to an investment in the Trust include:

- if Lease Commencement has not occurred by 1 July 2008

or such longer period as approved by Investors by Special

Resolution, Investors will receive their Application Monies

back in full;

- if Lease Commencement occurs prior to 1 July 2008, but

after 1 July 2007, Investors will continue to receive the

90-day bank bill rate until Lease Commencement;

- from Lease Commencement, Investors will have an indirect

interest in the Property which will be leased to a single

tenant, which means that Investors will be exposed to the

risk that Optus and the Guarantor of the Optus Lease,

SingTel Optus Pty Limited, default on their obligations;

- there is no secondary market and no redemption facility for

Instalment Receipts, and although a Limited Liquidity Facility

is intended to operate from Lease Commencement, the

Limited Liquidity Facility may be terminated at any time

without notice to Investors under certain circumstances; and

- the Bank Loan and liability for the Final Instalment, which

when aggregated, increases the Gearing Ratio to 90%, may

magnify the losses (and gains) to Investors.

Section 10 provides a more detailed analysis of risks associated

with the Offer.

10


08

1.

Key Investment

Features (cont.)

Key investment features

Feature Summary Section(s)

Other investment

information

Taxation

Superannuation

funds

The report in Section 13 prepared by Deloitte states a tax

deduction for Interest and Fees paid by Investors on the Final

Instalment is likely to be available where the Investor’s purpose

for investing is the derivation of future assessable income

(other than capital gains) in excess of the amount of these

deductions.

Trustees of superannuation entities should obtain their own

professional advice and exercise their own skill and care in

determining whether an investment in the Trust is appropriate.

The report in Section 14 prepared by Mallesons Stephen

Jaques states that:

- Instalment Receipts do not constitute a “borrowing”, but

there is a risk that APRA or the ATO may take a different

view; and

- for the purposes of complying with the "in-house" asset

rules, a SMSF would need to restrict its investment under

the terms of the Offer together with any other "in-house"

assets it has, to 5% of the market value of all of its assets.

3.8, 4.7, 10.5

and 13

4.14 and 14


2.

Details

of the Offer

09

2.1 The Offer

The Offer, which is the subject of this PDS, is for the

sale by Stockland Funds Management Limited (SFML)

of 85,867,000 Units at $1.00 each. The investment

will be evidenced by Instalment Receipts. SFML is

the seller of the Units and the issuer of Instalment

Receipts.

Instalment Receipts represent an Investor's beneficial

interest in Units and are functionally similar to partly

paid units. By participating in the Offer, Investors will

acquire the benefits of ownership of Units subject to

the obligation to pay the Final Instalment and Interest

and Fees on the Final Instalment.

Following payment of the First Instalment on

Application, Investors will receive Instalment Receipts

which they will hold until the Final Instalment is paid,

though they can transfer or sell their Instalment

Receipts (and hence their interest in the underlying

Units) prior to the Final Instalment Payment Date.

While the Final Instalment remains unpaid, legal title

to the Units will be held by the Security Trustee.

Upon payment of the Final Instalment by Investors to

the Security Interest Holder, the Instalment Receipts

and Units will be redeemed and new Units will be

issued to Investors within 40 Business Days. Deloitte

has confirmed in its Taxation Report in Section 13 that

CGT rollover relief should be available to Investors

(subject to any changes in the law). Upon issue of

new Units, Investors will then have both the legal and

beneficial interest in the Units.

The First Instalment payable by Investors is $0.40 per

Unit on Application. The Final Instalment of $0.60 per

Unit will be payable to the Security Interest Holder on

the Final Instalment Payment Date (in approximately

eight years time, subject to certain conditions detailed

in Sections 4.4 and 4.5).

Structure of the Offer

Investors

Investors have a beneficial

interest in Units which is

subject to the Security

Interest.

Security Trustee

Instalment Receipts are issued to

Investors following payment of the First

Instalment. Investors must pay Interest

and Fees and the Final Instalment to the

Security Interest Holder.

The Security Interest Holder holds

a Security Interest in the Units.

Security Interest Holder

Units are issued to the

Security Trustee.

The Security Interest Holder

has an obligation to pay $0.60 per Unit on Lease

Commencement to the Responsible Entity.

Trust

The Trust makes a loan to

MPT. Following Lease

Commencement the Trust

will hold 49% of the

Ordinary Units in MPT.

MPT*

Financier provides the Bank

Loan to the Trust.

Optus Lease in place from Lease

Commencement.

Financier

Optus

MPT owns the Property.

Property

* Section 3.1 provides details of the MPT unitholders and Section 15.3 provides details in relation to the

proposed MPT Investors’ Deed which will govern these unitholders.


10

2.

Details

of the Offer (cont.)

SFML is presently the beneficial owner of all of the

Units with legal title held by the Security Trustee. The

Units were issued for $1.00 each and are currently

paid up to a nominal amount. SFML will use the

proceeds of the Offer to ensure that the Units are

paid up to $0.40 per Unit on or before the date of

Final Allocation. The Trust will then use:

- the paid up value of the Units; and

- the first tranche of the Term Loan Facility,

to pay the Trust’s establishment and Offer costs and

to make a loan to MPT on which the Trust will receive

interest. Section 8.6 details the source and

application of these funds.

The Security Trustee will hold the Units on trust for

Investors (who will have the beneficial interest in the

Units) subject to the rights of the Security Interest

Holder as unpaid vendor. SFML is currently the

Security Interest Holder. However, it is intended that

Westpac will become the Security Interest Holder

shortly after Final Allocation and therefore will be

entitled to receive Interest and Fees and the Final

Instalment from Investors.

MPT owns the Property and has entered into an

agreement with Stockland Development (a related

company of SFML) to construct the Buildings.

Construction has commenced and is estimated to be

completed by 30 June 2007. Section 5 sets out

further information on the Property.

On Lease Commencement (estimated to be 1 July

2007), the Trust will use:

- the balance of the Term Loan Facility;

- the proceeds available following repayment of the

loan made to MPT; and

- the final call of $0.60 per Unit to be paid by the

Security Interest Holder,

to subscribe for 49% of the Ordinary Units in MPT.

Section 8.6 also details the source and application of

these funds.

If Lease Commencement does not occur by 1 July

2008 (which allows for one year beyond the

scheduled completion date) or such longer period as

approved by Investors by Special Resolution, then:

- Stockland Corporation will be required to pay the

Trust an amount equal to the Trust’s establishment

and Offer costs; and

- the Responsible Entity will redeem all Units and

repay Application Monies (First Instalment) to

Investors. Investors will not be entitled to interest

on their Application Monies but will be entitled to

retain any distributions paid by the Trust up to the

date of repayment.

In these circumstances, Investors will be released

from their obligation to pay the Final Instalment. MPT

has the right to repay the loan from the Trust (which

then obliges Stockland Corporation to reimburse the

Trust for establishment and Offer costs) at any time

prior to 1 July 2008 if Stockland Development, in its

reasonable opinion, advises MPT that Lease

Commencement cannot be achieved by 1 July 2008.

2.2 Fully underwritten Offer

SFML has entered into an Underwriting Agreement

with Westpac and Stockland Trust under which

Westpac has underwritten the subscriptions for 85%

of the Units and Stockland Trust has underwritten the

subscriptions for the remaining 15% of the Units (of

which Stockland Trust intends to apply for 5% of the

Units as a cornerstone investor). Further information

on the Underwriting Agreement is provided in

Section 15.4.

2.3 Minimum investment

Applications must be for a minimum of 25,000 Units

and thereafter in multiples of 1,000 Units. As a

minimum:

- the First Instalment ($0.40 per Unit) payable on

Application is $10,000; and

- the Final Instalment ($0.60 per Unit) payable on

the Final Instalment Payment Date (scheduled for

30 June 2013, subject to conditions) is $15,000.

The Responsible Entity may, with the agreement of

the Underwriters, waive the minimum Application

requirements.

- MPT will be required to repay the loan provided by

the Trust;


11

2.4 How to apply for Units

To apply for Units, please complete the Application

Form included at the back of or accompanying this

PDS.

When you have completed the Application Form,

attach a cheque for an amount equal to the First

Instalment ($0.40 per Unit) multiplied by the number

of Units applied for.

All cheques should be made payable to "Stockland

Funds Management Limited - on A/C of " and crossed "not negotiable". All

payments must be in Australian currency. Application

Monies must be paid by cheque and will not be

accepted by cash, BPay, direct bank credit or any

other form of electronic funds payment.

The completed Application Form and cheque(s) should

be sent together to the following address:

Stockland Direct Office Trust No. 2 Offer

C/- Westpac Banking Corporation

Reply Paid A990

Sydney South NSW 1234.

Completed Application Forms and cheque(s) must be

received no later than 5.00pm (Sydney time) on the

Closing Date which is scheduled for 16 September

2005.

If you have any questions about what you need to do

please call either the Stockland Direct Office Trust No.

2 information line on 1300 723 909 or Westpac

Structured Investments on 1800 024 420.

2.5 Terms and conditions in the

Application Form

By applying for Units, Applicants agree to accept a

number of obligations as set out on the back of the

Application Form. These terms and conditions include:

- acknowledgement that the accompanying

cheque(s) represent payment of the First

Instalment only;

- a direction that all Units represented by Instalment

Receipts are to be held by the Security Trustee in

accordance with the Security Trust Deed;

- an acknowledgement that the Applicant will be

issued with an Instalment Receipt by SFML in

respect of each Unit held by the Security Trustee

on the Investor’s behalf; and

- an agreement to be bound by all the terms and

conditions of the Offer to purchase Units as set

out in this PDS and the terms and conditions of

the Security Trust Deed, including without

limitation:

(i) the obligation to pay the Security Interest

Holder the Final Instalment on the Final

Instalment Payment Date;

(ii) the obligation to pay the Security Interest

Holder Interest and Fees on the Final

Instalment when due until the Final Instalment

Payment Date, together with additional default

interest on, and the recovery of costs of, any

unpaid amounts;

(iii) the requirement that no encumbrances (such

as a mortgage) may be created or arise over a

Unit, which could adversely affect, or make

conditional, the Security Interest Holder’s

Security Interest without the prior written

consent of the Security Interest Holder until

the Security Interest Holder’s Security Interest

has been fully satisfied; and

(iv) the requirement that any transfer of Instalment

Receipts is to be effected in the manner

prescribed in the Security Trust Deed.

2.6 Handling of Applications

Interest earned on Application Monies for the period

from banking of the Application Monies until

allocation of Units will be paid to successful

Applicants along with the Trust’s first distribution for

the period to 31 December 2005 (to be paid by 28

February 2006). However, interest need not be paid

on Application Monies received through a master

trust or wrap account, based on arrangements with

the providers of those services.

Application Monies will be returned to unsuccessful

Applicants as soon as possible but no later than eight

weeks after the date of Final Allocation, together with

any accrued interest.

Units will be allocated at the complete discretion of

the Responsible Entity subject to the Underwriting

Agreement (refer to Section 15.4) and may be

allocated in tranches. It is expected that Final

Allocation will take place on 27 September 2005.

Further details of the allocation of Units are included

in Section 15.6.


12

2.

Details

of the Offer (cont.)

2.7 No cooling off

Investors should note that the Trust will not be "liquid"

for the purposes of the Corporations Act. The Trust

will:

- provide a loan to MPT on which the Trust will

receive interest until Lease Commencement

(estimated to be 1 July 2007); and

- from Lease Commencement, hold a 49% indirect

interest in the Property via Ordinary Units in MPT.

The loan to MPT is not repayable on call and Ordinary

Units in MPT cannot be readily redeemed. Therefore

there will be no cooling off period in relation to

Applications. By submitting an Application, Applicants

will be deemed to have applied for the number of

Units for which payment is made. Once an

Application has been lodged, it cannot be withdrawn.

However, Investors may apply to sell their Instalment

Receipts using the Limited Liquidity Facility on or

after Lease Commencement, which is estimated to

be 1 July 2007. The conditions of the Limited

Liquidity Facility are detailed in Section 3.7.

2.8 Important considerations

Applicants should clearly understand that, if their

Application is successful, they take on a number of

obligations including the payment of Interest and Fees

on the Final Instalment on a quarterly basis and

payment of the Final Instalment on the Final

Instalment Payment Date. The payment of the

Interest and Fees will coincide with the quarterly

distributions made by the Trust and will be

automatically deducted by the Security Trustee from

Investors’ entitlement to receive gross distributions.

Section 4.6 details the Interest and Fees payable.

Investors should note that they will have an effective

Gearing Ratio of 90% on Final Allocation taking into

account the liability associated with the Final

Instalment (30% Gearing Ratio) and the Bank Loan

(60% Gearing Ratio). The level of the Gearing Ratio

may change over time depending on the drawn

balance of the Bank Loan, the Final Instalment and

the carrying value of the Trust’s gross assets.

The obligations and risks associated with the Final

Instalment are detailed in Sections 4 and 10.4. It is

important to note that the Security Interest Holder

has full recourse to an Investor for payment of all

outstanding amounts, including Interest and Fees and

the Final Instalment. Should the Trust not perform as

forecast, Investors may need to pay all or part of the

Interest and Fee payments and the Final Instalment

(together with any default interest and costs) from

their own resources. In certain circumstances, the

Final Instalment will become payable prior to 30 June

2013 (see Section 4.4). Investors should note that if

Westpac becomes the Security Interest Holder

following Final Allocation, all Interest and Fee

payments and the Final Instalment will be owed to

Westpac and Westpac has no involvement with or

control over the performance of the Trust and the

Units or Instalment Receipts.

Investors should consult their financial adviser before

deciding whether to invest in Units.

The Financial Forecasts assume payment of the

Interest and Fees.


3.

The Trust

13

3.1 Structure of the investment

The Trust is a managed investment scheme which

was registered with ASIC on 12 July 2005. It currently

has 85,867,000 Units on issue which are held by the

Security Trustee and beneficially owned by SFML.

The Units were issued for an issue price of $1.00

each and are paid only to a nominal amount.

The Trust has been established solely for the purpose

of providing a loan to MPT until Lease

Commencement and investing in Ordinary Units in

MPT on Lease Commencement. MPT owns the

Property. MPT is currently wholly owned by

Stockland Trust. On Lease Commencement,

Stockland Trust intends to reduce its interest in MPT

to a minimum of 31% by facilitating the issue of

ordinary units in MPT to the Trust (49%) and a

Wholesale Investor (20%). Stockland is currently

negotiating with a Wholesale Investor on price and

terms similar to that offered to the Trust. Any

proposed acquisition of ordinary units in MPT by

Wholesale Investor(s) prior to Lease Commencement

will be made on price and terms similar to that

provided to the Trust. Accordingly, MPT will be

owned by at least three separate entities on Lease

Commencement.

It is not intended that the Trust will acquire additional

properties in the future. However, MPT may

construct further buildings for Optus on the Property

if Optus requests such space, planning approval is

obtained, and MPT and Optus agree on the terms of

an additional lease. If the Trust is not able to fund its

share of the construction costs (which may be

achieved by increasing the amount of the Bank Loan),

then the Trust's Property Interest may be diluted to

less than 49% of the ordinary units in MPT. The

Responsible Entity will not agree to the construction

of further buildings if the Financial Forecasts are

adversely affected.

Proposed ownership of the Property on Lease Commencement

5%

Stockland Trust Wholesale Investor Trust

20%

31%

49%

MPT

Property


14

3.

The Trust (cont.)

3.2 Bank Loan

The Responsible Entity has received and accepted a letter of offer from Westpac for the provision of a Bank

Loan to the Trust. This Bank Loan is summarised below:

Facility Interest rate

Component of Bank Loan Purpose $ million per annum 5

Term Loan Facility To fund the loan to MPT and, on Lease 103.226 1 6.45% 2 & 5

Commencement, to fund the acquisition

of Ordinary Units in MPT

Capital Expenditure Facility To fund the Trust's share of capital 3.000 Variable 3

expenditure

Overdraft Facility To fund the day-to-day cash flow 1.000 Variable 4

management of the Trust

Total 107.226 6

Notes:

1. The Term Loan Facility will be drawn in two tranches: $7.425 million on the date of Final Allocation and the

balance of $95.801 million on Lease Commencement.

2. The interest rate on the Term Loan Facility has been fixed at 6.45% per annum (including the line fee and

margin) for the period from 1 July 2007 to 30 June 2013. The interest rate on the first tranche of the Term

Loan Facility has been fixed at 6.37% per annum until 30 June 2007. The Responsible Entity has agreed

with the Financier to defer or prepay some of the components of the Bank Loan which is beneficial to the

Trust.

3. The variable rate of interest on the Capital Expenditure Facility is based on the 90-day bank bill rate plus a

margin of 0.325% per annum.

4. The variable rate of interest on the Overdraft Facility is based on the bank bill overdraft rate plus a margin of

0.325% per annum.

5. The margin on the Term Loan Facility and line fee on the Bank Loan are being deferred until Lease

Commencement, and then the remaining margin and line fee for the period to 30 June 2013 is intended to

be prepaid on Lease Commencement. The interest rate shown above of 6.45% per annum for the Term

Loan Facility is prior to any deferment or prepayment of the margin.

6. An establishment fee of 0.15% of the total Bank Loan facility is payable on the first drawdown of the

facility.


15

3.3 Trust distributions

Trust distributions will be paid quarterly within two

months from the end of the Quarter in respect of

earnings of the Trust for the preceding three months

ending 30 September, 31 December, 31 March and

30 June.

The first distribution for the Trust will be for the period

from Final Allocation until 31 December 2005 and will

be paid by 28 February 2006.

3.4 Trust investment strategy

Prior to 31 December 2012, the Responsible Entity

will convene a meeting of Investors to consider an

investment strategy recommended by the

Responsible Entity which could include, but is not

limited to, the following:

- continuation of the Trust with a defined investment

and liquidity strategy;

- sale of the Units in consideration for units in

another trust;

- a public offering of the Trust or the Trust’s Property

Interest with the potential participation of

Investors by way of a separate offer document;

and/or

- outright disposal of the Trust’s Property Interest

and termination of the Trust, in which case the

Trust must first offer its interest in MPT to the

other unitholders in MPT, including Stockland Trust,

in line with the process set out in Section 3.5.

The Responsible Entity will recommend an

investment strategy which it considers will deliver the

overall most favourable outcome to Investors, on

balance, having regard to the risk and rewards of the

strategy, the financial position of the Trust and the

obligation of Investors to pay the Final Instalment.

The directors of the Responsible Entity will be

required to approve the approach to be recommended

to Investors. Any Stockland executive directors on the

board of the Responsible Entity will be excluded from

voting in relation to the selection of any investment

strategy recommendation that involves Stockland as a

principal other than as defined in this PDS (for

example, as Property manager or Responsible Entity -

refer to Section 7.2).

If an investment strategy contemplates a deferral of

the Final Instalment Payment Date, then the consent

of the Security Interest Holder will be required before

the strategy can be recommended or approved by

Investors and implemented by the Responsible Entity.

The Security Interest Holder may, in its absolute

discretion, withhold its consent to any deferral of the

Final Instalment Payment Date and will not be

required to consider the interests of Investors when

making its determination.

3.5 Process for disposal of the Trust’s

Property Interest

In the event that the Responsible Entity makes a

recommendation to Investors to dispose of the Trust’s

Property Interest and Investors support the

recommendation by passing a Special Resolution, the

Responsible Entity will endeavour to sell the Trust’s

Property Interest. The disposal of the Trust’s Property

Interest may involve:

- a disposal to Stockland Trust and/or the other

investors in MPT;

- a disposal through a public sale process; and/or

- an alternative exit mechanism.

In accordance with the proposed MPT Investors'

Deed (refer to Section 15.3), if the Trust wishes to

deal with the Trust's Property Interest, it must first

give notice to the responsible entity of MPT which

will commission a valuation of the Property and

calculate the Net Tangible Asset (NTA) per Ordinary

Unit. The Trust must first offer its interest to the other

MPT unitholders by written notice at a price

calculated at the NTA per Ordinary Unit (Original

Offer).

The other MPT unitholders will then have 20 Business

Days to accept the Original Offer. If one or more

unitholders accept the Original Offer, the Responsible

Entity will dispose of the Trust's Property Interest to

those parties on the terms set out in the written

notice of Original Offer.


16

3.

The Trust (cont.)

If the Original Offer is not accepted within 20

Business Days, then the Responsible Entity may

either:

- commence a public auction process to sell the

Trust’s Property Interest. The Responsible Entity

will have 115 Business Days from the date of its

Original Offer to sell the Trust’s Property Interest.

If the Trust’s Property Interest is not sold in that

period, the Responsible Entity must again comply

with the pre-emption process in the proposed

MPT Investors’ Deed as described above; or

- offer the Trust's Property Interest to other MPT

unitholders by written notice at a lower price or

materially different terms than the Original Offer

(Substitute Offer) after it has received approval

from Investors by majority resolution. The other

MPT unitholders will then have 15 Business Days

within which to accept the Substitute Offer. If the

Substitute Offer is accepted, the Responsible

Entity will dispose of the Trust's Property Interest

to those accepting MPT unitholders on the terms

set out in the written notice of Substitute Offer.

The Trust's Property Interest cannot be sold to a major

competitor of Optus. In addition, the proposed MPT

Investors' Deed has a prohibition on any one

unitholder in MPT owning 50% or more of the

ordinary units in MPT after Lease Commencement.

In the event the Trust's Property Interest, or part

thereof, is sold to Stockland Trust, the Responsible

Entity may agree that Stockland Trust can pay the

consideration for the Trust's Property Interest by cash,

Stockland Securities or a combination of both.

Deloitte has confirmed in its Taxation Report in Section

13 that, in certain circumstances, capital gains tax

rollover may be available in relation to such a sale.

3.6 Transfers of Instalment Receipts

or Units

An investment in the Trust should be considered a

medium to long term investment. Investors may

transfer their Instalment Receipts to third parties at

any time in accordance with the terms and conditions

detailed below and in the Security Trust Deed (refer to

Section 4.10).

To transfer Instalment Receipts Investors must

complete a transfer form available from the

Responsible Entity (or download the transfer form

from the Responsible Entity’s website), and forward

the completed form to the Registrar as directed on

the transfer form. The transferee is required to sign

the form in acknowledgement of the transferee’s

agreement to be bound by the terms of the Offer and

the Security Trust Deed.

A transfer form must be received no later than 15

Business Days before the end of a Quarter for it to be

processed during that Quarter. If the transfer form is

received no later than 15 Business Days prior to the

Quarter end and it is accepted by the Responsible

Entity, the transferee will become the registered

holder of the Instalment Receipts the subject of the

transfer form as at the first day of the following

Quarter. The transferee will be entitled to

distributions and will incur Interest and Fees on their

Final Instalment in relation to the Quarter in which the

transfer form was accepted and processed. The

Responsible Entity will endeavour to provide both the

Investor and the transferee with confirmation of the

transfer of Instalment Receipts within 10 Business

Days after the end of the Quarter in which the

transfer form was received. Any transfer form

submitted later than 15 Business Days prior to the

Quarter end will be held by the Responsible Entity but

not processed until the following Quarter.

Units may only be transferred after the Final

Instalment is paid and new Units issued to Investors.

3.7 Limited Liquidity Facility

Westpac has agreed to offer to acquire up to a total of

1,000,000 Instalment Receipts per Quarter from

Investors from Lease Commencement at a price

calculated in accordance with a predetermined formula

subject to various conditions provided in this Section 3.7

(Limited Liquidity Facility). The Limited Liquidity Facility

may be terminated without notice to Investors at any

time and there is no guarantee that it will continue. The

circumstances in which the Limited Liquidity Facility can

be terminated are set out at the end of this Section 3.7.

Investors who wish to apply to participate in the Limited

Liquidity Facility should request a Limited Liquidity

Facility transfer form from the Responsible Entity (or

download the transfer form from the Responsible

Entity's website), complete it and send it to the

Registrar as directed on the transfer form, which will

then forward it to Westpac. Completed transfer forms

under the Limited Liquidity Facility will be considered an

irrevocable offer by Investors and cannot be withdrawn.

Investors should contact the Responsible Entity, at first

instance, if they have any queries or complaints

regarding the operation of the Limited Liquidity Facility.


17

For applications under the Limited Liquidity Facility to

be considered, Investors should send their transfer

forms in time for the Registrar to receive it no later

than 15 Business Days prior to the Quarter end. If an

Investor submits a transfer form within the relevant

time and the application is accepted by the Limited

Liquidity Facility provider, then the Investor will be

entitled to the distribution, and will incur Interest and

Fees on their Final Instalment, for the Quarter in

which the transfer form was received.

Completed Limited Liquidity Facility transfer forms

will be accepted by Westpac in the order of receipt.

Any transfer forms that are not accepted due to the

Limited Liquidity Facility being oversubscribed in any

single Quarter may be included in the applications for

the following Quarter’s Limited Liquidity Facility. The

Responsible Entity, on behalf of Westpac, will notify

Investors in writing of whether their application has

been successful within 15 Business Days after the

end of the Quarter in which the transfer form was

received.

Applications to transfer Instalment Receipts under the

Limited Liquidity Facility must be for an Investor’s

total holding of Instalment Receipts. Investors cannot

apply to sell a portion of their Instalment Receipt

holding under the Limited Liquidity Facility.

The purchase price payable by Westpac for each

Instalment Receipt acquired under the Limited

Liquidity Facility will be the NTA per Unit less a 2.5%

discount and any transaction costs (including any

stamp duty). The consideration received for the

transfer of Instalment Receipts under the Limited

Liquidity Facility will be reduced by any outstanding

financial obligations owed to the Security Interest

Holder by the Investor (refer to Section 4). The

purchaser of the Instalment Receipts from an Investor

under the Limited Liquidity Facility will also be

required to assume all future obligations of the

Investor under the Security Trust Deed, including the

obligation to pay Interest and Fees during the term

and the obligation to pay the Final Instalment on the

Final Instalment Payment Date. Westpac will charge

each Investor a one-off flat fee of $110, inclusive of

GST, for processing the transfer of their Instalment

Receipts under the Limited Liquidity Facility.

For the purposes of the Limited Liquidity Facility, the

NTA per Unit will be calculated twice a year (30 June

and 31 December).

The most recent NTA per Unit will be disclosed in the

quarterly distribution statements sent to Investors

(within two months after the end of each Quarter).

Westpac will pay the net consideration for the

transfer of the Instalment Receipts under the Limited

Liquidity Facility by cheque within 15 Business Days

from the end of the Quarter.

STML, on behalf of Stockland Trust, has placed a

standing order with Westpac to acquire a maximum

of 1,000,000 Instalment Receipts per Quarter from

Lease Commencement. The standing order from

STML can be withdrawn by STML at any time by

written notice to Westpac, and the standing order is

limited such that STML will not acquire Instalment

Receipts if to do so would cause its total aggregate

beneficial holding in the Trust to exceed 19.9%. The

price payable by STML for the acquisition of

Instalment Receipts under the standing order with

Westpac is the same as the price paid by Westpac to

Investors under the Limited Liquidity Facility.

The Limited Liquidity Facility can be terminated by

Westpac in the following circumstances:

- STML, individually or together with an associated

person, beneficially owns 19.9% or more of all

Instalment Receipts;

- STML withdraws its standing order with Westpac

to acquire Instalment Receipts, which it may do at

any time at its complete discretion;

- the Responsible Entity convenes a meeting of

Investors to consider the investment strategy of

the Trust;

- there is a change in control of the Responsible

Entity;

- the Trust’s Property Interest is sold, or STML as a

unitholder in MPT disposes of its interest in the

Property; or

- there is a change in Westpac’s Australian Financial

Services Licence such that Westpac can no longer

provide the Limited Liquidity Facility.

The Responsible Entity will notify Investors if the

Limited Liquidity Facility is terminated with the

quarterly distribution statement next following the

date of termination.


18

3.

The Trust (cont.)

3.8 Taxation

Deloitte has provided a report on the taxation

consequences of investing in the Trust in its Taxation

Report in Section 13. A summary of that report is

provided below.

Under current Australian taxation law, the Responsible

Entity should not be subject to income tax in respect

of the income derived by the Trust on the basis that

Investors have a present entitlement to the entire net

income of the Trust, and the Trust is not considered a

public trading trust. The Constitution provides that

Investors have a present entitlement to the net

income of the Trust for each financial year. Investors

will be subject to tax on their respective proportions

of the Trust’s taxable income at rates applicable to

each individual Investor’s personal tax circumstances.

A deduction for Interest and Fee payments made by

Investors on the Final Instalment may be available

where the purpose of the Investor in investing in

Instalment Receipts, and subsequently Units, is for

the derivation of future assessable income (other than

capital gains) in excess of the amount of these

deductions.

CGT rollover relief should be available to Investors

(subject to any changes in law) when the Final

Instalment is paid, resulting in a redemption of the

Instalment Receipts and Units and a new issue of

Units to Investors.

Applicants should refer to Sections 4.7 and 13, and

seek independent advice from a taxation adviser in

light of their individual circumstances.

3.9 Limited liability

The Constitution contains provisions designed to limit

members’ liability in respect of their investment in the

Trust to the amount, if any, of unpaid subscription for

their Units. However, Australian courts have not yet

tested the effectiveness of provisions of this kind.

It should be noted that Investors will have an

obligation to pay the Final Instalment on the Final

Instalment Payment Date (refer to Section 4.2).

3.10 Labour, environmental, social and

ethical standards

The Responsible Entity will not take labour standards

or environmental, social and ethical considerations

into account in the selection, retention or realisation

of investments.

Sydney CBD

Lane Cove Road

Waterloo Road

Epping Road

Photo: An artist’s impression of the Property on completion of the Buildings (within the yellow line).


4.

Instalment

Receipts

19

The Instalment Receipt structure has been utilised to

provide Investors with the ability to acquire a

beneficial interest in a Unit by paying only $0.40 per

Unit on Application. Each Unit will be paid up to $0.40

by SFML by the date of Final Allocation and fully paid

by the Security Interest Holder on or before Lease

Commencement. Investors do not need to pay the

Final Instalment of $0.60 per Unit until the Final

Instalment Payment Date (scheduled to be 30 June

2013), although in certain circumstances payment of

the Final Instalment may be accelerated (see Section

4.4) or delayed (see Section 4.5).

SFML is the Security Interest Holder but it is intended

that soon after Final Allocation Westpac (or its

nominee) will become the Security Interest Holder

under the Security Trust Deed with the right to

receive the Final Instalment and Interest and Fees

from Investors until the Final Instalment Payment

Date. SFML or the person who becomes the

Security Interest Holder will be entitled to recover the

Final Instalment when due and all Interest and Fees

payable on the Final Instalment. It is expected

Interest and Fees will be deducted from distributions

on the Units. The method for payment of the Final

Instalment will be advised to Investors by the

Security Interest Holder at the relevant time.

4.1 Nature of Instalment Receipts

By participating in the Offer, Investors will acquire a

beneficial interest in Units. Each Investor will receive

Instalment Receipts as evidence of their beneficial

interest in the Trust. Investors will hold the

Instalment Receipts until the Final Instalment

Payment Date, although they can transfer or sell their

Instalment Receipts (and hence their beneficial

interest of the underlying Units) prior to the Final

Instalment Payment Date. Upon payment of the Final

Instalment by Investors, Instalment Receipts and the

existing Units will be cancelled, and an equal number

of new Units will be issued to Investors.

Each Instalment Receipt represents evidence of an

Investor's beneficial interest in one Unit which will be

paid up by the Security Interest Holder to $0.40 on

Final Allocation using the Application Monies from

Investors with the remaining $0.60 fully paid by the

Security Interest Holder on Lease Commencement.

The Application Form includes undertakings by

Investors to:

- pay the Security Interest Holder the Final

Instalment on the Final Instalment Payment Date;

- pay Interest and Fees on the Final Instalment

when due, including any additional default interest

on, and recovery costs of, the Final Instalment;

- agree to the Units being registered in the name of

the Security Trustee; and

- be bound by the Security Trust Deed and the

Constitution.

The Security Trustee will hold the Units on trust for

Investors, subject to the Security Interest, whilst the

Final Instalment remains outstanding.

It is important to note that the Security Interest

Holder has full recourse to an Investor for payment of

all outstanding amounts, including Interest and Fees

and the Final Instalment.

The terms and conditions of the Instalment Receipts

are set out in the Security Trust Deed which is

summarised in this Section 4. The security trust

arrangements constitute a series of separate trusts,

one for each Unit, rather than a single trust. The

rights and obligations attaching to the Units are set

out in the Constitution which is summarised in

Section 15.1.

4.2 Payment of Final Instalment

Each Investor is obliged to pay the Final Instalment

when it is due on the Final Instalment Payment Date.

Investors shown in the Instalment Receipt register

five Business Days prior to the Final Instalment

Payment Date will be required to pay the Final

Instalment to the Security Interest Holder. The

Security Interest Holder will send Investors a

payment notice 30 Business Days before the Final

Instalment is due.

When a sale or transfer of an Instalment Receipt

occurs in accordance with the process set out in

Sections 3.6 or 3.7, the obligation to pay the Final

Instalment is also transferred from the former

Investor to the new Investor.


20

4.

Instalment

Receipts (cont.)

If the Final Instalment is paid in full, the Responsible

Entity will redeem the Units and issue an equal

number of new Units to the Investor within 40

Business Days after the Final Instalment Payment

Date (or such longer period as the Security Interest

Holder may reasonably require to enable the sale of

defaulted Units to be completed). Upon payment of

the Final Instalment and any outstanding Interest and

Fees, the Security Interest in the Unit is extinguished

and the relevant Instalment Receipt cancelled.

If an Investor does not pay the Final Instalment by the

Final Instalment Payment Date, interest will accrue on

a daily basis on the unpaid amount at an interest rate

equal to Westpac's published Indicator Lending Rate

plus 2.0% per annum.

The Security Trustee will issue a final reminder notice

to Investors who have not paid, that will set a date by

which payment of the Final Instalment and accrued

interest is required. If payment is not received, then

the Security Interest Holder may direct the Security

Trustee to sell the Units to which the Instalment

Receipts relate by way of enforcement of its Security

Interest and apply the proceeds of sale to pay all

outstanding amounts to the Security Interest Holder

(including any Interest and Fees, expenses of sale,

duties and taxes owed). If there is any remaining

balance from the sale, the Security Trustee will pay it

to the Investor.

If an Investor fails to pay the Final Instalment in full,

then any amount received by the Security Interest

Holder may be apportioned across all of the Units that

relate to the Investor’s Instalment Receipts, with the

result being that the Final Instalment on all of the

Units will not be fully paid. In these circumstances,

the Security Interest Holder may direct the Security

Trustee to sell all of the Units and apply the proceeds

of sale to pay outstanding amounts.

If the net proceeds from the sale are insufficient to

fully repay the Investor’s obligations, the Investor

remains liable to pay the outstanding amount and any

associated Interest and Fees and costs. The Security

Trustee, as trustee for the Security Interest Holder,

may take all necessary and appropriate action to

recover the unpaid amounts including commencing

legal proceedings against such Investor.

Proceeds from the sale of the Trust’s Property Interest

that are received prior to the sale proceeds of

defaulted Units will be applied towards repayment of

the Final Instalment.

4.3 No voluntary early prepayment of

the Final Instalment

Investors do not have any right to prepay the Final

Instalment prior to the Final Instalment Payment

Date.

4.4 Early payment of the Final

Instalment

Early payment of the Final Instalment may be

required by the Security Interest Holder in the event

that any of the following circumstances arise:

- in any Quarter, distributions from the Trust are

insufficient to cover a payment of Interest and

Fees and any other amounts owing to the Security

Interest Holder;

- the Responsible Entity is replaced as the

responsible entity of the Trust;

- there is a Change of Control in the Trust;

- there is a material breach by the Security Trustee

of the terms of the Security Trust Deed;

- an insolvency event occurs in respect of the

Responsible Entity or the Trust; or

- the Responsible Entity incurs financial

indebtedness on behalf of the Trust other than that

contemplated in this PDS and not otherwise

approved by the Security Interest Holder.

If, prior to 30 June 2013, the Security Interest Holder

elects to require early repayment of the Final

Instalment as a consequence of any of the above

events, the Security Interest Holder must provide

each Investor with a Final Instalment payment notice.

This notice will require the early payment, within 30

Business Days of the notice, of the Final Instalment,

the payment of accrued interest (if any) on the Final

Instalment and any costs incurred by the Security

Interest Holder and the Security Trustee as a

consequence of the acceleration of the Final

Instalment Payment Date, including break costs in

respect of the fixed rate funding of the Final

Instalment. In these circumstances, the amount

payable may be more or less than $0.60 per Unit and

is unquantifiable in advance.


21

4.5 Extension of the Final Instalment

Payment Date

If the Responsible Entity recommends a realisation of

the Trust’s Property Interest, Investors support the

recommendation by passing a Special Resolution and

the proceeds of the Trust’s Property Interest are to be

received after 30 June 2013, the Security Interest

Holder will agree to extend the payment of the Final

Instalment for up to three months on similar terms

and interest rates unless otherwise agreed between

the Security Interest Holder and the Responsible

Entity.

4.6 Interest and Fees on the Final

Instalment

Investors have an obligation to pay the following

Interest and Fees on the Final Instalment until the

Final Instalment Payment Date:

- interest relating to the Final Instalment to be paid

quarterly from Lease Commencement on the first

Business Day following the end of the Quarter.

The interest rate on the Final Instalment is fixed at

the rate of 6.79% per annum until 30 June 2013,

of which 0.50% per annum is intended to be

prepaid on a present value basis for the term of

the Final Instalment at Lease Commencement;

- an establishment fee relating to the Final

Instalment to be paid from the first distribution

payable to Investors for the Quarter ending 31

December 2005. The establishment fee is 1.00%

of the Final Instalment; and

- a line fee relating to the Final Instalment to be

paid on the first Business Day following the first

Quarter after Lease Commencement. The line fee

is 0.25% per annum of the Final Instalment from

Final Allocation to Lease Commencement and will

accrue interest at the rate of 0.25% per annum of

the unpaid line fee from Final Allocation until the

line fee and accrued interest is paid.

All Interest and Fees will be deducted by the Security

Trustee from Investors’ entitlement to receive gross

distributions. The Financial Forecasts in Sections 1,

8.3 and 8.4 are calculated after deducting any Interest

and Fees relating to the Final Instalment.

If Investors do not provide their TFN or ABN, the

Responsible Entity will be required to deduct tax at

the highest marginal rate of tax (including the

Medicare Levy) from distributions and the balance of

the distribution may not be sufficient to pay Interest

and Fees on the Final Instalment. If this occurs and

the Investor fails to pay all outstanding amounts, the

Security Interest Holder may direct the Security

Trustee to sell the Units to which the Investor’s

Instalment Receipts relate by way of enforcement of

its Security Interest.

4.7 Tax deductions for Interest and Fees

Interest and Fees in respect of the Final Instalment

that are deducted from distributions will be treated as

having been paid by Investors as at the record date

for the relevant distribution. A deduction for Interest

and Fees paid by Investors on the Final Instalment

may be available where the purpose of the Investor in

investing in Instalment Receipts, and subsequently

Units, is for the derivation of future assessable

income (other than capital gains) in excess of the

amount of these deductions.

Applicants should read the Taxation Report in Section

13 and seek independent advice from a professional

taxation adviser that takes into account their individual

circumstances.

4.8 No encumbrances

Until the Final Instalment has been paid, Units to

which Instalment Receipts relate will be registered in

the name of the Security Trustee. Investors may not

create or permit to arise or continue to exist any

mortgage, pledge, lien, charge, assignment, or other

security interest over a Unit which could affect the

Security Interest of the Security Interest Holder.

Investors may grant security interests over their

Instalment Receipts, but such security interests

cannot extend to the underlying Unit and the Security

Trustee and the Registrar need not recognise or give

effect to any mortgage or encumbrance in respect of

the Instalment Receipt.


22

4.

Instalment

Receipts (cont.)

4.9 Investors’ rights in respect of Units

The Security Trust Deed operates to pass through to

Investors certain rights which they would otherwise

enjoy if they were recorded as the registered

unitholders. These rights include the Investors’:

- right to receive all distributions from the Trust,

subject to the deduction of Interest and Fees due

on the Final Instalment;

- right to receive notices, attend meetings of the

Trust and exercise voting rights on Investor

resolutions put forward by the Responsible Entity;

- right to receive the Trust's annual report and other

Investor notices directly from the Responsible

Entity as though they were holders of Units;

- ability to transfer or sell their beneficial interest in

Units. Any transfer of the Instalment Receipts will

have the effect of selling (or transferring) the

underlying beneficial interest in Units; and

- right to receive the benefit of any distribution,

entitlement or right, including any rights issue,

bonus issue, or entitlements offer arising in

respect of an Investor’s beneficial interest in the

Units. Any new securities subscribed for by

Investors pursuant to an entitlements offer would

not usually be subject to the Security Interest.

4.10 Transfers

Investors may transfer their Instalment Receipts. By

becoming an Investor, a transferee agrees to be

bound by all of the terms of the Security Trust Deed.

The rights and obligations evidenced by an Instalment

Receipt may be transferred in combination but not

separately.

Upon registration of a transfer of an Instalment

Receipt, the transferor is discharged from any liability

to pay the Final Instalment provided that the transfer

is recorded before the relevant record date. The

Security Trust Deed provides that, by a transferee

becoming a registered holder of an Instalment

Receipt, that transferee automatically agrees to be

bound by all of the terms of the Security Trust Deed,

including the obligation to pay Interest and Fees on

the Final Instalment and the Final Instalment.

The Registrar will provide persons who become

Investors with a notice that sets out the number of

Instalment Receipts held by each such Investor.

4.11 Security Trustee

SFML has appointed Permanent Trustee Company

Limited as Security Trustee. The Security Trustee's

role is to hold Units on trust for Investors subject to

the Security Interest Holder’s Security Interest. The

Security Interest is the right of SFML, or a

replacement Security Interest Holder, as an unpaid

seller to receive the Final Instalment and interest

thereon. SFML is the initial Security Interest Holder.

Another person may become the Security Interest

Holder without prior notice to Investors. The Security

Trustee will act as:

- agent for the Security Interest Holder in exercising

its power of sale under its Security Interest; and

- custodian for Investors by being the registered

owner of Units, on behalf of Investors, until the

Final Instalment is paid.

The Security Trustee will provide services to Investors

to enable them to exercise their rights as the

beneficial owners of Units. Fees and expenses in

relation to the services provided by the Security

Trustee will be funded from the Trust's income and as

such should be considered part of the Trust's

expenses.

The Security Trustee will be entitled to a fee of $8,000

per annum for performing these services, together

with reimbursement of all out-of-pocket expenses.

The fee will increase annually in line with movements

in the CPI.

Where the Security Trustee takes action to recover

amounts owing by Investors or to enforce the

Security Interest, the Security Trustee acts as agent

for the Security Interest Holder and is to have regard,

to the full extent permitted by law, solely to the

Security Interest Holder’s interest. In these

circumstances, Investors’ rights will be limited.

Except in some limited circumstances where a court

may do so, the Security Interest Holder alone is

entitled to remove the Security Trustee and

simultaneously appoint a new trustee. The Security

Interest Holder will indemnify the Security Trustee in

respect of certain liabilities arising from the proper

performance of its responsibilities under the Security

Trust Deed.


23

4.12 Limitations of Security Trustee's

discretion and liabilities

The Security Trustee has limited powers, rights and

discretions in respect of the Units.

The Security Trustee is not liable for any loss or

damage arising out of its acts or omissions, except to

the extent that such loss or damage is caused by the

Security Trustee’s negligence or fraud. The Security

Trustee is not liable in respect of any failure to do any

act or thing if it is hindered, prevented or forbidden

from doing that act or thing by any law. The Security

Trustee may delegate various tasks and rely on

various persons and things. The Security Trustee has

delegated a number of tasks to the Responsible

Entity. The Security Trust Deed sets out in detail the

limitations on the Security Trustee's liability to

Investors and other persons.

4.14 Superannuation Investors

Trustees of superannuation entities should obtain

their own professional advice and exercise their own

skill and care in determining whether an investment in

the Trust is appropriate.

The report in Section 14 prepared by Mallesons

Stephen Jaques states that:

- Instalment Receipts do not constitute a

“borrowing”, but there is a risk that APRA or the

ATO may take a different view; and

- for the purposes of complying with the “in-house”

asset rules, a SMSF would need to restrict its

investment under the terms of the Offer together

with any other “in-house” assets it has, to 5% of

the market value of all of its assets.

The Security Interest Holder has provided the Security

Trustee with certain indemnities and the Security

Trustee has no right of recourse against any Investor

for any disbursements, expenses and outgoings

incurred by the Security Trustee for performing its

duties under the Security Trust Deed except in relation

to the sale of Units following an Investor’s default, the

acceleration of the Final Instalment Payment Date

(see Section 4.4), or any duties or taxes payable in

relation to an Investment Recepit or Unit.

4.13 Amendments

The Security Trust Deed may be amended by

agreement between the Responsible Entity, the

Security Interest Holder and the Security Trustee.

However, amendments are restricted to prevent any

changes from:

- impacting upon the right of an Investor, upon

payment of the Final Instalment, to receive a

transfer of Units and, pending such transfer, to

enjoy the beneficial interest in respect of such

Units; and

- accelerating the Final Instalment Payment Date

other than in a way which is already contemplated

by the terms of the Security Trust Deed, as

outlined in this PDS.


24

5.

The Property

5.1 Description

The new Optus Australian headquarters will provide a

workplace for over 6,500 employees located on 7.6

hectares of landscaped secure surrounds. The

external environment will comprise grass areas,

pathways, trees, water features, an amphitheatre and

a number of outdoor dining areas. The Property will

include a childcare centre, fitness centre and a variety

of cafés and restaurants for the exclusive use of

employees.

The Property will consist of six Buildings with a total

building area of 84,000 sqm (subject to survey) and is

scheduled for completion in July 2007. The Buildings

will be a combination of four and five levels arranged

in a chevron shape that opens to the major entrance.

Located between the Buildings will be service cores

and on the ground floor will be zones offering

additional outdoor meeting and lunch facilities. Visual

connection between inside and outside will be

achieved via transparent bridges that link the

Buildings and glass lift lobbies that face the centre of

the Property.

The main entrance will provide visitors with a sense

of arrival as well as parking that is kept separate from

employee car movements. The other two main entry

points will be orientated to the new Macquarie Park

and Macquarie University railway stations which are

due to open around the completion of the Buildings.

The design of the Property incorporates

environmentally sustainable development principles,

primarily aimed at minimising greenhouse gas

emissions and is targeted to achieve a 4.5 star

Australian Building Greenhouse Rating. Extensive

grey water-recycling should assist in minimising water

usage.

This globally benchmarked all-in one village will

provide employees with an exceptional environment

designed to foster a sense of community and further

position Macquarie Park as one of Australia's leading

corporate precincts.

Location of Property


25

5.2 The Property

The following are the key details of the Property:

Address 1-5 Lyon Park Road, Macquarie Park (formerly North Ryde), New South Wales, 2113

Owner

Macquarie Park Trust (MPT)

Building description Each Building is intended to be a quality facility, incorporating the following features:

- floor plates of approximately 3,000 sqm;

- quality fit out and finishes;

- undercover car parking on site;

- good access from surrounding streets;

- quality presentation and maintenance; and

- quality technical services.

Location

Approximately 15 kilometres north west of the Sydney CBD, the Property is set in a

suburban office park environment near Macquarie University. It is in close proximity to

Epping and Lane Cove Roads and the M2 Motorway, which services the North Western

Sydney area. Access to the Property should be improved when the Lane Cove Tunnel

opens as planned in 2007. Rail access will be possible once the Epping to Chatswood

line is completed as expected in 2008, with the Property located within 600 and 700

metres from the new Macquarie Park and Macquarie University stations respectively.

Age The Buildings are expected to be completed by 1 July 2007.

Building area

Levels

Cars

Tenant

Expected to be 84,000 sqm and is subject to a final survey.

Four to five levels of commercial office across six campus-style buildings, together with

undercover and above ground car parking.

2,100 cars, comprising 2,002 underground car spaces over two levels and 98 above

ground car spaces.

Optus Administration Pty Limited ACN 055 136 804 guaranteed by SingTel Optus Pty

Limited ACN 052 833 208 (refer to Section 6.2).

Land area Approximately 75,905 sqm or 72,285 sqm (excluding Paul Street North property –

refer to Section 5.6).

Current valuation

Purchase price

$351,107,800 assuming the Buildings were completed on 1 July 2005 prepared by Jones

Lang LaSalle (NSW) Pty Limited dated 1 July 2005 assuming that the Building area is

84,000 sqm. The valuation for the Trust’s Property Interest (49%) is $172,042,822

(refer to Section 11).

$351,107,800 payable by MPT in two instalments: $50.45 million which was paid in July

2005 and the balance of $300.85 million payable on Lease Commencement.


26

5.

The Property

(cont.)

5.3 The development team

Construction of the Buildings has commenced and is

due for completion by 1 July 2007. The development

team comprises Stockland Development (as

developer), Rice Daubney (as architect) and

Baulderstone Hornibrook (as builder). Each is

described below:

Stockland

Stockland is one of the largest owners of commercial

property in Macquarie Park with six properties.

Details of Stockland’s experience and a description of

its activities are provided in Section 7.

Rice Daubney

The Building design, by leading architects Rice

Daubney, is based on an understanding of collegiate

and corporate campuses around the world.

Incorporating environmentally sustainable

development initiatives, the development will provide

an international benchmark in commercial campus

design.

Rice Daubney's previous works include the Henry

Deane Park and the NRMA Tower in Sydney and the

Canon and Philips (formerly Microsoft) buildings in

Macquarie Park. Members of Rice Daubney's design

team have also been involved with the development

of corporate campuses in North America, Europe and

Asia.

Baulderstone Hornibrook

Baulderstone Hornibrook has been appointed by

Stockland Development to undertake the construction

works under a fixed time and fixed terms

arrangement. Baulderstone Hornibrook’s record of

landmark developments, which demonstrate its broad

range of development and construction experience

and capabilities, includes the following:

- Macquarie University Research Park, NSW -

$180 million;

- Westpoint Shopping Centre, Blacktown, NSW -

$220 million;

- Freshwater Place office tower, Melbourne, VIC -

$170 million; and

- Cross City Tunnel, Sydney, NSW - $610 million.

Bilfinger Berger AG (Bilfinger) is the parent company

of Baulderstone Hornibrook. Bilfinger is listed on the

Frankfurt and Stuttgart stock exchanges and is one of

the world’s largest publicly listed construction and

development companies. As at 31 December 2004,

Bilfinger had total assets of over €3.7 billion and

employed approximately 49,000 people worldwide.

5.4 Turn-Key Development Deed

The Turn-Key Development Deed between Stockland

Development and MPT delegates the majority of the

obligations under the Agreement for Lease to

Stockland Development and provides that Stockland

Development must:

- procure all necessary permits, consents and

approvals for the construction of the Buildings,

including any variations (Works);

- carry out and complete the Works in accordance

with the project specifications (including the

delivery of 84,000 sqm of Building area), the

approved plans and all legislative requirements

and relevant Australian Standards (Stockland

Development has entered into a design and

construction agreement with the builder,

Baulderstone Hornibrook, for the construction of

the Buildings);

- provide MPT with a guarantee in relation to any

costs and incentives payable under the Agreement

for Lease such as the incentive payment payable

to Optus (approximately 2% of the total rental

commitments over the initial term of the Optus

Lease);

- provide MPT with a guarantee in relation to the

difference between the actual rent payable by

Optus and the rent based on 84,000 sqm of

Building area under the Optus Lease (refer to

Sections 7.7.1 and 10.2);

- provide MPT with a guarantee in relation to part of

the car parking licence fee (refer to Sections 5.7

and 7.7.1); and

- fund the GST applicable to the consideration paid

by MPT for the development of the Buildings at an

interest rate of 6.4% per annum accruing daily.

The consideration payable by MPT to Stockland

Development is subject to a number of conditions

precedent, including confirmation of Lease

Commencement. The total consideration for the

Property is $351,107,800 (which equals the valuation

amount in Section 11).


27

5.5 Overview of the Macquarie Park

office market

The valuation report in Section 11 provides an

overview of the Macquarie Park office market.

In addition, the Responsible Entity is of the opinion

that the Macquarie Park office market should benefit

from the large scale infrastructure projects being

undertaken in the area. There is over $4.5 billion of

infrastructure currently being developed, including:

- the Lane Cove Tunnel roadway which is scheduled

to open in 2007. The twin 3.6km tunnels will

reduce travel times between Sydney's CBD and

suburbs to the north-west of Sydney by an

estimated 15 minutes, reduce traffic congestion in

local areas around Lane Cove and provide better

facilities for pedestrians and cyclists; and

- the Epping to Chatswood railway line which is

scheduled for completion in 2008. The expected

daily patronage on this new section of the railway

is 15,000 passenger trips. Two of the new railway

stations will be located within 600 and 700

metres from the Property.

5.6 Paul Street North

Paul Street North, Macquarie Park, is currently a

public road that will form part of the Property. Ryde

City Council has agreed to sell Paul Street North to

MPT once it has acquired the road from the Crown.

Stockland Development is separately negotiating to

purchase a parcel of land adjacent to Paul Street

North, currently owned by the NSW Roads and Traffic

Authority, and which will form part of Paul Street

North. MPT will fund the acquisition of Paul Street

North using a loan provided by Stockland Trust.

Interest on this loan will capitalise at 6.25% per

annum. The loan, including capitalised interest, will

be repaid on Lease Commencement; however, MPT

will receive a corresponding reduction in the

consideration payable pursuant to the Turn-Key

Development Deed.

If Paul Street North is not acquired by MPT prior to

Lease Commencement because Ryde Council either

refuses to enter into a contract of sale or otherwise

sell the land comprising Paul Street North, Stockland

Development will pay Optus an amount of

compensation in consideration for not having

exclusive right to the entire Property. In this instance,

Ryde City Council will continue to own Paul Street

North. Jones Lang LaSalle (NSW) Pty Limited has

confirmed in its valuation report contained in Section

11 that this will not materially affect the Property's

value as the location of Paul Street North will be used

as a vehicular access point for the Property whether it

is owned by MPT or the Council.

5.7 16 Giffnock Avenue

16 Giffnock Avenue, Macquarie Park, is a commercial

office building located adjacent to the Property that is

ultimately owned by Stockland Trust and does not

form part of the Property. The terms of the Optus

Lease provide Optus with:

- a first right to lease 16 Giffnock Avenue once the

existing tenant of that property vacates; and

- a non-exclusive right to access the Property via a

right of way pursuant to the Optus Lease.

It is intended that an agreement be executed with the

owner of the 16 Giffnock Avenue property to provide

Optus with these rights under the Optus Lease.

An existing tenant of the 16 Giffnock Avenue property

currently has rights to park some of its cars on the

Property. To the extent that this tenant requires car

parking spaces on the Property, Optus will not pay a

licence fee relevant to those spaces, MPT will grant

the tenant a nominal sub-lease over part of the

Property and take steps to secure alternate car

parking spaces for Optus. However, Stockland

Development has agreed to pay MPT the licence fee

that would have been payable had the 16 Giffnock

Avenue tenant not occupied some of the Optus car

parking spaces.

5.8 Due diligence and use of experts

In considering the purchase of the Trust’s Property

Interest, various independent experts were engaged

on behalf of the Trust to assist in the due diligence

process. The Responsible Entity has relied on these

experts in assessing the risks associated with the

Trust’s Property Interest and the Financial Forecasts.

As a result of these investigations, the Responsible

Entity is not aware of any matters, other than those

set out in this PDS, which could have a material

impact on the value of the Trust’s Property Interest or

the Financial Forecasts.


28

6.

The Leases

and the Tenant

6.1 The Stockland lease

Stockland Development will lease the Property from MPT to access the land for development of the Buildings

until the date of Lease Commencement with Optus. MPT will utilise this rental income to pay the Trust

interest on the loan provided by the Trust to MPT. The terms of this lease are summarised below.

The Stockland lease

Lessee Stockland Development Pty Limited ABN 71 000 064 835.

Commencement On Final Allocation, expected to be 27 September 2005.

Term The lease expires on the earlier of Lease Commencement with Optus or 1 July 2008

(unless extended by mutual agreement).

Options

None.

Rent Net rent of $3,684,577 per annum for the period from commencement until 1 July 2007.

If Lease Commencement is after 1 July 2007, net rent of $3,153,368 per annum applies

until Lease Commencement or 1 July 2008 (unless extended by mutual agreement).

Outgoings

Outgoings are fully recoverable from Stockland Development.

An artist’s impression of the site plan of the Property.


29

6.2 The Optus Leases

There will be three separate leases with Optus for lease terms of 14, 15 and 16 years respectively. Each lease

is for two of the six Buildings and commences once the Buildings have been completed. MPT will then pay

the Trust a distribution based on the Trust's Property Interest from the rent received from the Optus Lease. The

essential terms of each lease are identical, unless otherwise specified and are summarised below:

The Optus Leases

Lessee Optus Administration Pty Limited ACN 055 136 804.

Guarantor of the SingTel Optus Pty Limited ACN 052 833 208.

Optus Lease

Commencement On practical completion which is scheduled for 1 July 2007.

Terms Buildings A and B, 14 years 30,099 sqm, 712 undercover and 35 uncovered car

spaces

Buildings C and D, 16 years

Buildings E and F, 15 years

30,098 sqm, 714 undercover and 37 uncovered car

spaces

23,803 sqm, 576 undercover and 26 uncovered car

spaces

Options

Building area

Initial rent

Rental growth

One option for each lease of five years. The commencing rent under the option is market

rent, and increases thereafter by 3% per annum. If Optus exercises the option to renew

the leases of all Buildings A, B, C, D, E and F then the market review will be conducted

on the basis of a single lease.

84,000 sqm in total, subject to a final survey.

Net rent of $24,577,800 per annum from Lease Commencement. This figure may reduce

due to arrangements with a tenant on a neighbouring property (refer to Section 5.7) or if

less than 84,000 sqm of Building area is developed; however, Stockland Development will

guarantee these components of the rent (refer to Section 7.7.1).

3% on each anniversary of the leases, excluding:

- the first anniversary where there is no rent review; and

- the sixth anniversary of the leases where there is a market review of the rent with a

maximum rental increase of 6% and a maximum rental decease of 3% from the

previous year’s rent.

Outgoings

Repairs on expiry

Carpet

Passageways

Outgoings are fully recoverable from Optus. Outgoings include property management

fees which are limited to a maximum of 0.5% of the aggregate of the rent and outgoings

but excluding amounts paid for Structural Works.

Optus is not required to repair the premises if the Optus Lease ends, without default by

Optus, at any time more than 10 years after Lease Commencement.

From the seventh anniversary the lessor will supply sufficient carpet to recarpet two

floors of the premises each year until all floors have been recarpeted once. Optus will

install the replacement carpet at its cost.

Optus may request that part or all of the passageways between the Buildings be used as

lettable area for office space from time to time. In this instance, Optus will pay rent for

the passageways at the same rate per square metre as the underlying lease.


30

6.

The Leases

and the Tenant (cont.)

Partial surrender

Assignment

and sub-letting

Signage and

naming rights

Optus may, on the seventh anniversary of Lease Commencement, surrender Building A

(approximately 18% of the total leased area), provided that not less than 18 months'

notice is given. In this instance, the Optus lease for Building A and B will be varied to

apply only to Building B with appropriate adjustments in rent and outgoings. Optus may

elect to hand back its exclusive common area relating to Building A and pay for certain

works to separate the Buildings from an operational perspective. MPT will also be

required to pay for certain works. Optus will also surrender 356 undercover and 18

uncovered car spaces.

Optus may assign the Optus Lease to a related entity of Optus or the Guarantor of the

Optus Lease without the lessor’s approval. Subject to the lessor’s approval and the

conditions of the Optus Lease, Optus may sub-let or license its interest in the Optus

Lease. The guarantee is not prejudiced in either situation.

While Optus is the tenant of four or more of the Buildings it has the right to name and

alter the name of the Property subject to the lessor's approval. At the end of the Optus

Lease Optus must remove the signage, services and structure but is not obliged to repair

any surfaces.

6.3 Overview of Optus and

the Guarantor of the Optus Lease

Optus is the second largest telecommunications

company in Australia, and provides a broad range of

communication services including mobile, national

and long distance services, local telephony, business

network services, internet and satellite services and

subscription television to customers throughout the

country. Optus had revenues of approximately A$6.9

billion in the year ended 31 March 2005.

The obligations of Optus under the Optus Lease are

guaranteed by SingTel Optus Pty Limited, rated A+

(stable) by Standard & Poor's (refer to Section 15.10).


7.

About

Stockland

31

7.1 Overview of Stockland

Stockland is one of Australia’s largest diversified listed

property groups, with a market capitalisation of

approximately $7.5 billion as at 15 June 2005.

Stockland owns and manages an investment portfolio

valued at $7.7 billion as at 31 December 2004.

Stockland is rated A- (stable) by Standard & Poor’s

(refer to Section 15.10).

Stockland has two business components, Stockland

Trust and Stockland Corporation. Stockland Trust owns

investment assets across Australia and New Zealand

comprising commercial office, shopping centre,

industrial and office park properties. Stockland

Corporation operates a real estate management and

development business in Australia spanning

residential estates, apartments, hotels, retail projects

and large mixed use sites. Stockland Corporation also

operates nine hotels around Australia under the

Saville brand.

The Unlisted Property Funds division of Stockland is

responsible for the establishment and the ongoing

management of funds and syndicates to provide both

wholesale and retail investors with direct property

investment opportunities across each of the major

property sectors.

Stockland’s Commercial and Industrial Property

division has specialist expertise in commercial

property acquisition and disposal, asset management,

development, leasing, engineering services, finance,

property administration and property management. It

currently owns 55 properties valued at $2.6 billion as

at 31 December 2004. Stockland Trust intends to hold

at least a 31% indirect interest in the Property on

Lease Commencement through its investment in

MPT and also intends to hold a further indirect

interest through a 5% investment in the Trust.

Stockland’s vision as an owner and manager is to

provide a high level of integrated property

management services, where tenants deal directly

with the property owner.

Stockland is a significant participant in the Macquarie

Park property market (it owns six properties in

Macquarie Park) and closely follows the movements

in the demand and supply cycles for office space and

property values.

Further information about Stockland can be obtained

from its internet site: www.stockland.com.au.

Stockland ASX Code SGP

Rated A- (stable) by

Standard & Poor’s*

Stockland Corporation Limited

Stapled

Security

Stockland Trust

Unlisted

Property

Funds

Hotel

Management

Residential

Development

Trust and

Property

Management

Shopping

Centres

Commercial and Industrial

Property

* Section 15.10 provides information about the ratings.


32

7.

About

Stockland (cont.)

7.2 Stockland’s involvement with

the Trust

Stockland or wholly owned subsidiaries of Stockland

are undertaking key roles in connection with the Trust

and the management of the Property including:

- acting as responsible entity of the Trust and

responsible entity of MPT;

- selling the Units, which are evidenced by

Instalment Receipts (refer to Section 2.1);

- underwriting 15% of the Offer (refer to Section

2.2);

- intending to hold at least a 31% indirect interest in

the Property as a unitholder in MPT from Lease

Commencement (refer to Section 2.1);

- being appointed as Property manager (refer to

Section 7.6);

- intending to apply to purchase 5% of the

Instalment Receipts as part of the Offer on equal

terms and conditions as other Investors (refer to

Section 2.2);

- providing a number of guarantees and an

indemnity (refer to Section 7.7);

- developing the Property (refer to Section 5.4); and

- holding pre-emptive rights under the terms of the

proposed MPT Investors' Deed (refer to Section

15.3) to acquire the Trust's Property Interest on

disposal by the Trust (refer to Section 3.5).

The Responsible Entity is of the opinion that the

various roles of Stockland in relation to the Offer and

the Property are a positive feature of the Offer.

7.3 The responsible entity of the Trust

The Trust is managed by Stockland Funds

Management Limited (Responsible Entity), a wholly

owned subsidiary of Stockland Corporation.

The directors of the Responsible Entity at the date of

this PDS are Graham Bradley (Chairman), David Kent,

Matthew Quinn, Tony Sherlock and Terry Williamson.

Mr Bradley, Mr Quinn and Mr Williamson are directors

of Stockland. Mr Kent and Mr Sherlock are

independent of any association with Stockland. The

directors may change over time.

The Responsible Entity has a Compliance Committee

whose members are Mr Sherlock, Mr Williamson and

Mr Hepburn (Company Secretary and Stockland

General Counsel). The functions of the Compliance

Committee are to monitor compliance by the

Responsible Entity with the Compliance Plan and

Constitution, and to assess at regular intervals

whether the Compliance Plan is adequate.

The Responsible Entity's corporate governance

framework has been established to protect the

interests of Investors, and is detailed in Section 7.8.

Details of each of the directors of the Responsible

Entity and the CEO - Stockland Unlisted Property

Funds are provided below.

Details of the fees payable to the Responsible Entity

are disclosed in Section 9.1.

Further information about Stockland Funds

Management Limited can be obtained from its

internet site:

www.stockland.com.au/unlistedpropertyfunds.

The fees payable to Stockland in connection with

these roles are detailed in Section 9. The distributions

and returns forecast in this PDS to be received by

Investors are calculated after taking into account all

fees to be paid to Stockland during the Forecast

Period.


33

Graham Bradley

Chairman and Non-executive Director

Mr Bradley is a professional non-executive director. He is currently a director of

Stockland, Singapore Telecommunications Limited and MBF Australia Limited. He is

also Chairman of HSBC Bank Australia Limited, Film Finance Corporation Australia

Limited, Proteome Systems Limited and Po Valley Energy Limited. Mr Bradley was

previously Managing Director of Perpetual Trustees Australia Limited from 1995 to

2003 and, prior to that, was National Managing Partner of Blake Dawson Waldron

from 1991 to 1995 and a Partner of McKinsey & Company from 1984 to 1991. He is

a member of the Stockland Audit Committee.

David Kent

Non-executive Director

Mr Kent is Executive Chairman of Everest Capital Limited, a director of Everest

Babcock and Brown Alternative Investments and Chairman of the Brett Whiteley

Foundation. He was previously Executive General Manager of Axiss Australia and

Invest Australia's International Operations and served as a member of the Financial

Sector Advisory Council. Mr Kent is a past Senior Trade and Investment

Commissioner in Paris and Washington DC for the Australian Trade Commission.

From 1987 to 1999, Mr Kent worked for Morgan Stanley in Sydney, Melbourne and

New York where he became Managing Director and Head of Investment Banking.

Prior to Morgan Stanley, Mr Kent worked for Banque Paribas. Mr Kent has

previously served as Deputy Chairman of the Art Gallery of NSW Foundation.

Matthew Quinn

Executive Director

Mr Quinn has an extensive background in commercial, retail, industrial and

residential property investment and development. He began his career in the United

Kingdom as a chartered accountant and moved to Australia in 1987 with Price

Waterhouse. In 1988 he joined the Rockingham Park Group, a substantial Western

Australian private property group. Mr Quinn joined Stockland in 1999 and was

appointed to his current role of Managing Director in October 2000. Mr Quinn held

the position of National President of the Property Council of Australia from March

2003 until March 2005. Mr Quinn is a Fellow of the Australian Property Institute.


34

7.

About

Stockland (cont.)

Tony Sherlock

Non-executive Director

Mr Sherlock is a former Senior Partner of Coopers & Lybrand having national

responsibility for credit risk management. In that capacity, he has obtained

experience in the banking and finance, mining, agriculture, building, construction and

development sectors. Mr Sherlock is the Chairman of the Tenix Superannuation Fund

and is a non-executive director of Sydney Aquarium Limited and IBA Health Limited

and is Chairman of Equatorial Mining Limited. He is Chairman of the Audit

Committee of Commander Communications Limited. Mr Sherlock is the former

Chairman of the Woolmark Company and has acted on a number of committees for

both Federal and State governments.

Terry Williamson

Non-executive Director

Mr Williamson is currently a non-executive director of Stockland. He is also a

director of St Vincent's and Mater Health Group Sydney, Excel Coal Limited and

United Medical Protection Limited, and a member of the Sydney University Faculty

of Economics and Business Studies Advisory Board. Mr Williamson was previously

Chief Financial Officer of Bankers Trust Australia Limited/BT Financial Group Pty

Limited from 1997 to 2002 and prior to that, he was a partner of Price Waterhouse

for 17 years. Mr Williamson is the Chairman of the Stockland Audit Committee.

Robb Macnicol

Chief Executive Officer - Stockland Unlisted Property Funds

Mr Macnicol joined Stockland in January 2004 to establish the Unlisted Property

Funds division and is responsible for growing the Stockland retail syndication and

wholesale property funds management business. He has over 15 years' investment

banking and accounting experience across a range of asset classes. Prior to joining

Stockland, Mr Macnicol held a senior position with Macquarie Bank for six years,

specialising in the securitisation of real estate for the unlisted investment markets.

He has expertise in capital raising, corporate advisory, transaction structuring,

property acquisitions, finance and funds management. Mr Macnicol is an Associate

of The Institute of Chartered Accountants in Australia.


35

7.4 The issuer

Stockland Funds Management Limited, in its personal

capacity, is also the issuer of the Instalment Receipts.

It operates within the same framework and

compliance culture as described in Section 7.3.

7.5 The responsible entity of MPT

MPT is managed by Stockland Trust Management

Limited (STML). STML is a wholly owned subsidiary

of Stockland Corporation.

The directors of STML at the date of this PDS are

Peter Daly (Chairman), Graham Bradley, Bruce Corlett,

David Fairfull, Nicholas Greiner, Matthew Quinn, Hugh

Thorburn and Terry Williamson. The directors may

change over time.

As responsible entity of MPT, STML will undertake a

range of asset management services, on an armslength

basis, including providing development and

construction management services for the Property,

providing all documentation and other information

reasonably necessary, and assisting in the preparation

and analysis of that information relating to the

determination of the market value of the Property, or

the transfer or sale of the Property, creating and

managing annual asset plans and budgets, including

operating and capital budgets, leasing and operating

plans for the Property, and developing plans for and

recommending capital expenditure for approval by the

unitholders of MPT.

Details of the fees payable to STML are disclosed in

Section 9.2.7.

7.6 Property manager

Stockland Property Management Pty Limited has

been appointed as the Property manager to undertake

the ongoing management of the Property and to

attend to all leasing requirements. It is a wholly

owned subsidiary of Stockland Corporation.

The Property manager has extensive experience in

property and asset management and manages a

commercial and industrial property portfolio valued at

$2.6 billion as at 31 December 2004. The Property

manager's approach is focussed on tenant service,

long term tenant retention, and the ability to provide

an overall management service that ensures each tier

of property management is leveraged to maximise

rental returns and add value.

The Property manager has implemented a centralised

service platform, called the Stockland Service Centre,

across its commercial portfolio to provide tenants

with better service and to build and foster tenant

relationships. The Stockland Service Centre has been

custom designed and a unique feature of the service

is that it consists of Stockland personnel who

maintain a comprehensive knowledge of each

property being managed.

The Property manager will, as prescribed in the

Property Management Agreement, undertake a range

of property management and facilities management

related activities, on an arms-length basis. These

activities include management of the Property under

the terms of the Optus Lease, supervision of the

performance of contractors under all contracts and

agreements for services provided to the Property and

preparation of all financial records, budgets and

reports, including the collection of rent.

Given the Property manager's expertise and

knowledge of the property industry, the Responsible

Entity believes the Property manager's involvement in

the management of the Property is beneficial to the

Trust.

The Property manager's fees are recoverable from

Optus as an outgoing of the Property and are detailed

in Section 9.2.7. Further details of the Property

Management Agreement are set out in Section 15.7.

7.7 Stockland guarantees and loans

Various Stockland entities have provided guarantees

and a loan in order to facilitate the Trust’s transaction

with MPT and to manage the consequences in the

event that construction has not been completed and

Lease Commencement has not occurred by 1 July

2008 (one year beyond the scheduled completion

date) or such longer period as approved by Investors

by Special Resolution. These are detailed below:

7.7.1 Stockland Development guarantees

Stockland Development is providing two guarantees:

one in relation to the obligations associated with the

Agreement for Lease and the other in relation to a

rental arrangement with a tenant of a neighbouring

Stockland owned property at 16 Giffnock Avenue,

Macquarie Park:


36

7.

About

Stockland (cont.)

- Optus currently has an Agreement for Lease with

STML as trustee for Property Trust of Australasia,

which is in the process of being novated to MPT.

The Agreement for Lease was negotiated on the

basis that Stockland Trust would be the developer

and owner. There are certain obligations in the

Agreement for Lease which a third party purchaser

(such as MPT) would not normally assume.

Stockland Development, under the Turn-Key

Development Deed, is therefore guaranteeing:

(i)

costs and incentives associated with the

Agreement for Lease (thereby placing MPT in

a position of acquiring a new building from a

developer and separating the obligations of the

developer from that of the owner); and

(ii) to the Trust only, the Trust's share of the

difference between the actual rent payable by

Optus and the rent based on 84,000 sqm of

Building area under the Optus Lease (in the

event that the Building area is less than 84,000

sqm, but more than 79,800 sqm). In the event

that less than 79,800 sqm has been built (a

5% tolerance level), then Optus has the right

to terminate the Agreement for Lease, in

which case the Trust will be wound up and

Investors will receive their Application Monies

back in full as described in Sections 7.7.2 and

7.7.3; and

- Stockland Development will guarantee the licence

fee of $80,752 per annum (which is subject to

rental reviews on the same basis as the Optus

Lease) in relation to car parking spaces that may

be occupied by a tenant of a neighbouring

Stockland owned property at 16 Giffnock Avenue,

and who has been granted a sub-lease by MPT

over part of the Property. Section 5.7 provides

more detail on this matter.

7.7.2 Stockland Trust guarantee

If the Optus Lease does not commence by 1 July

2008 (which allows for one year beyond the

scheduled completion date) or such longer period as

approved by Investors by Special Resolution, then the

Trust will be wound up. In order to effect the

termination, MPT will repay the loan by the Trust by

either issuing ordinary units in MPT to Stockland Trust

or borrowing funds from Stockland Trust which will

thereafter retain 100% ownership of the Property.

MPT reserves the right to repay the loan from the

Trust (which then obligates Stockland Trust to

subscribe for further ordinary units in MPT or provide

a loan to MPT equal to the face value of the loan by

the Trust) at any time until 1 July 2008 if Stockland

Development, in its reasonable opinion, advises MPT

that Lease Commencement cannot be achieved by 1

July 2008.

7.7.3 Stockland Corporation indemnity

If the Trust is wound up as a result of the Optus

Lease not having commenced by 1 July 2008 or such

longer period as approved by Investors by Special

Resolution, Stockland Corporation will indemnify the

Trust to prevent any shortfall in the return of the

Application Monies to Investors from terminating the

Trust. This indemnity will include any costs

associated with the early termination of interest rate

swaps entered on behalf of the Trust. Investors will

not be entitled to interest on their Application Monies

but will be entitled to retain any distributions paid by

the Trust up to the date of repayment.

Stockland Corporation is also providing an indemnity

to the interest rate swap counterparty until such time

as the counterparty to the swap receives security

over the assets and undertaking of the Trust. This is

expected to occur on or shortly after Final Allocation.

7.7.4 Stockland Trust loan

A loan is proposed to be provided by Stockland Trust

to MPT to assist MPT with the acquisition of Paul

Street North (which is intended to be part of the

Property but is currently owned by the Crown and the

NSW Roads and Traffic Authority). These

arrangements are discussed in more detail in Section

5.6. The loan, including capitalised interest, will be

repayable on Lease Commencement. The

consideration for the development of the Buildings

paid by MPT to Stockland Development under the

Turn-Key Development Deed will effectively reduce by

the amount of the bullet repayment (both principal

and interest).


37

7.8 Corporate governance and conflict

resolution

A corporate governance framework has been

established by the Responsible Entity to protect the

interests of Investors. This framework includes the

following approach:

- detailed disclosure in this PDS of the Stockland

roles, agreements and fees in relation to the Trust

and the Trust's Property Interest;

- a comprehensive due diligence process for the

Offer involving independent legal, tax, accounting

and property valuation experts;

The directors of the Responsible Entity have a

fiduciary duty to act in the best interests of Investors

in relation to decisions affecting the Trust.

One of the directors of SFML and STML, Graham

Bradley, is also a director of Singapore

Telecommunications Limited which is the ultimate

parent company of Optus. Mr Bradley has declared

his conflict of interest and not been involved in the

negotiations, nor voted on any board decisions, in

relation to the Optus Lease or the development of

the Property.

- documented and formally approved and executed

agreements between Stockland and the Trust,

with separate independent legal advice obtained

by the Responsible Entity on behalf of the Trust;

- the board of the Responsible Entity including two

of five directors that are independent of Stockland;

- compliance monitoring by the Compliance

Committee in accordance with the Corporations

Act and the Compliance Plan, and review

procedures by Stockland's internal compliance unit

in respect of the conduct of other Stockland

entities generally; and

- a requirement for the approval of all related party

transactions by the board of the Responsible

Entity to be by unanimous vote, including the

independent directors. Any Stockland executive

directors are excluded from voting on such

transactions.


38

8.

Financial

Information

8.1 Introduction

The Financial Information contained in this Section 8

should be read in conjunction with the significant

accounting policies (Section 8.7), the key forecast

assumptions (Section 8.8), the sensitivity analysis

(Section 8.10) and the risk factors (Section 10).

The Financial Information included in this Section 8

consists of:

- forecast Statements of Financial Performance and

Statements of Distribution for the Forecast Period;

- the pro-forma Statement of Financial Position of

the Trust on Final Allocation and Lease

Commencement; and

- sources and applications of funds of the Trust on

completion of Final Allocation and Lease

Commencement.

The Financial Forecasts have been adopted by the

directors of the Responsible Entity and represent the

Responsible Entity’s best estimate, based on present

circumstances, as to the most likely set of conditions

to which the Trust will be exposed.

The Financial Information has been presented in an

abbreviated form insofar as it does not include all of

the disclosures required by the Australian Accounting

Standards applicable to annual financial reports

prepared in accordance with the Corporations Act.

Returns on an investment in the Trust are not

guaranteed. Although due care and attention has been

taken in preparing the Financial Forecasts, many

factors which affect the Financial Forecasts are

outside the control of the Responsible Entity and its

directors or are not capable of being foreseen or

accurately predicted. This is particularly the case the

longer the forecast period. As such, actual results may

differ from the Financial Information. For further

information on such factors, please refer to the risks

detailed in Section 10.

In addition, Investors’ financial returns are dependent

on the distributions received by them and the amount

received on disposal of the Trust’s Property Interest or

through an alternative investment strategy approved

by a Special Resolution. Generally, Investors will

realise their investment following the disposal of the

Trust’s Property Interest and/or the termination of the

Trust. Accordingly, Investors’ returns will be sensitive

to, and directly affected by, the price at which the

Trust’s Property Interest is realised. Other

sensitivities are detailed in Section 8.10.

The assumptions on which the Financial Information

is based are set out in this Section 8. All figures are

subject to rounding.

8.2 Presentation of financial statements

that comply with A-GAAP and A-IFRS

ASIC requires that product disclosure statements

issued on or after 1 January 2005 should present

financial reports that comply with Australian

equivalents to International Financial Reporting

Standards (A-IFRS). As users may also be familiar

with financial reports that comply with Australian

Generally Accepted Accounting Principles (A-GAAP),

forecast statements of financial performance and

financial position that comply with A-IFRS and A-

GAAP (as in force as at 31 December 2004) are

detailed in Sections 8.3 and 8.5. However, all

financial reports prepared for Investors will need to

comply with A-IFRS.


39

The key differences between A-GAAP and A-IFRS in relation to the Financial Information are detailed below.

Item Treatment under A-GAAP Treatment under A-IFRS

Rental Income

Derivative

instruments

Contributed

equity (from

unitholders)

Accrued as the underlying lease

provides, generally resulting in increases

in rent each year.

Gains and losses on interest rate swaps

are included in the determination of

interest expenses.

Gains and losses on forward interest

rate contracts are deferred and

amortised over the term of the

underlying borrowing.

Equity in the Statement of Financial

Position.

Averaged over the life of the lease, to

the extent it can be reliably measured,

resulting in no rental growth.

Derivatives are initially recognised at

fair value on the date a derivative

contract is entered into and are

subsequently remeasured at their fair

value at each reporting date. The

resulting gain or loss is recognised in

the Statement of Financial

Performance immediately unless the

derivative is designated and effective

as a hedging instrument, in which

event the timing of the recognition in

the Statement of Financial

Performance depends on the nature of

the hedge relationship.

In certain circumstances, the

contribution from unitholders may be

classified as debt, where the Trust has

an obligation to repay the contributed

amount.


40

8.

Financial

Information (cont.)

8.3 Forecast Statements of Financial Performance

The forecast Statements of Financial Performance for the pro-forma 9 month period ending 30 June 2006, and

the years ending 30 June 2007, 30 June 2008 and 30 June 2009 under both A-GAAP and A-IFRS are as follows:

Forecast Statements of Financial Performance

A-GAAP

Notes.

1. The Responsible Entity may defer part of this fee as described in Section 9.2.1.

2. Trust expenses include valuation fees, audit fees, annual report costs, custodian and registry fees.

A-IFRS

9 months to Year ending Year ending Year ending 9 months to Year ending Year ending Year ending

30-Jun-06 30-Jun-07 30-Jun-08 30-Jun-09 30-Jun-06 30-Jun-07 30-Jun-08 30-Jun-09

($'000) ($'000) ($'000) ($'000) ($'000) ($'000) ($'000) ($'000)

Income

Share of profits

from associate 0 0 11,506 11,741 0 0 13,436 13,670

Interest revenue

MPT loan 1,740 2,128 0 0 1,740 2,128 0 0

Bank interest 274 313 269 219 274 313 269 219

Total income 2,014 2,441 11,775 11,960 2,014 2,441 13,705 13,889

Expenses

Borrowing costs

Bank Loan 970 1,166 7,028 7,016 620 747 7,115 7,160

Responsible Entity's fee 1 140 164 832 826 140 164 832 826

Trust expenses 2 111 136 140 143 111 136 140 143

Total expenses 1,221 1,466 8,000 7,985 871 1,047 8,087 8,129

Net profit/(loss) before

distributions to

unitholders 793 975 3,775 3,975 1,143 1,394 5,618 5,760

Distributions to

unitholders 2,161 1,975 7,208 5,834 2,161 1,975 7,208 5,834

Net profit/(loss) after

distributions to

unitholders (1,368) (1,000) (3,433) (1,859) (1,018) (581) (1,590) (74)


41

8.4 Forecast Statements of Distributions to Investors

The forecast Statements of Distributions for the pro-forma 9 month period ending 30 June 2006, and the years

ending 30 June 2007, 30 June 2008 and 30 June 2009 are as follows:

Forecast Statements of Distributions

9 months to Year ending Year ending Year ending

30-Jun-06 30-Jun-07 30-Jun-08 30-Jun-09

($'000) ($'000) ($'000) ($'000)

Gross forecast distributions 2,161 1,975 7,208 5,834

Interest on Final Instalment 0 0 (3,241) (3,241)

Payment of Final Instalment

establishment costs (515) 0 (1,391) 0

Net forecast distributions 1,646 1,975 2,576 2,593

Pre-tax return 1 90-day bank bill rate 90-day bank bill rate 7.50% 7.55%

Tax deferred component

of distribution 100% 100% 100% 100%

After Tax Return 1, 2 90-day bank bill rate 90-day bank bill rate 12.56% 12.61%

Notes.

1. The 90-day bank bill was 5.70% as at 27 June 2005.

2. The After Tax Return is higher than the pre-tax return in 2008 and 2009 as it assumes deductions of

Interest and Fees associated with the Final Instalment are available to Investors. The After Tax Returns are

based on a marginal rate of income tax of 48.5%.


42

8.

Financial

Information (cont.)

8.5 Pro-forma Statements of Financial Position

Set out below are the pro-forma Statements of Financial Position of the Trust under both A-GAAP and A-IFRS

as at Final Allocation (expected to be 27 September 2005) and at the date of Lease Commencement (expected

to be 1 July 2007):

Pro-forma Statements of Financial Position

A-GAAP 1 A-IFRS 1

On Lease

On Lease

At Final Allocation Commencement At Final Allocation Commencement

($'000) ($'000) ($'000) ($'000)

Current assets

Cash 7,745 3,278 7,745 3,278

Total current assets 7,745 3,278 7,745 3,278

Non current assets

Loan to Macquarie Park Trust 25,129 0 25,129 0

Deferred acquisition costs 688 0 688 0

Investment in Macquarie Park Trust 0 173,138 0 173,138

Borrowing costs capitalised 2,908 2,100

Bank Loan interest prepayment 0 3,402 0 3,402

Total non current assets 28,725 178,640 25,817 176,540

Total assets 36,470 181,918 33,562 179,818

Current liabilities

Distributions payable 0 494 0 494

Total current liabilities 0 494 0 494

Non current liabilities

Borrowings 7,425 103,226 4,517 100,357

Total non current liabilities 7,425 103,226 4,517 100,357

Net assets attributable to unitholders 29,045 78,967

Liabilities to unitholders

Payable to unitholders 2 0 0 29,045 78,967

Total liabilities to unitholders 0 0 29,045 78,967

Total liabilities 7,425 103,720

Net assets 29,045 78,198 0 0

Unitholders' equity

Contributed equity 3 34,347 85,867

Unit issue costs (5,302) (5,302)

Excess of distributions over profits 0 (2,367)

Total unitholders' equity 29,045 78,198

Number of Units on issue ('000) 85,867 85,867 85,867 85,867

NTA per Unit (cents) See Note 4 91.1 See Note 4 92.0

Notes.

1. The difference between the Forecast Statements of Financial Position under A-GAAP and A-IFRS is

described in Section 8.2.

2. The fair value of the Units reflects the amount incurred by the Trust in connection with the transaction

costs. The liability is subsequently increased by its share of the Trust's profits.

3. The contributed equity is the aggregate of the payment by SFML on the Units using the First Instalment

plus the fair value of the Final Instalment at Final Allocation.

4. NTA is 40 cents per Unit compared to the 40 cents per First Instalment as a result of the indemnity

provided by Stockland Corporation as detailed in Section 7.7.3. If no indemnity was provided, the NTA would

be 33.8 cents per Unit compared to a First Instalment of 40 cents per Unit.


43

NTA per Unit on Final Allocation is $0.40 compared to the First Instalment of $0.40 per Unit as a result of the

indemnity from Stockland Corporation, as detailed in Section 7.7.3. Upon Lease Commencement, the NTA per

Unit calculated in accordance with A-IFRS is forecast to be $0.92.

It should be noted that Investors’ capital will be protected during the period from Final Allocation until Lease

Commencement by the indemnity, which, if triggered, ensures Investors will be repaid their Application Monies

(see Sections 7.7.2 and 7.7.3).

8.6 Sources and applications of funds

Set out below is the forecast sources and applications of funds in respect of the Offer and the acquisition of

the Trust's Property Interest, based on the Financial Information as at Final Allocation and at Lease

Commencement:

Sources and applications of funds

Up to Lease

At Final Allocation

Commencement

($'000)

($'000)

Sources of funds

Security Interest Holder First Instalment 34,347 34,347

Security Interest Holder Final Instalment 0 51,520

Bank Loan 7,425 103,226

Total sources of funds 41,772 189,093

Applications of funds

Loan to Macquarie Park Trust 25,129 0

Investment in Macquarie Park Trust 0 172,450

Responsible Entity's fees (including underwriting and distribution fees) 7,166 7,166

Working capital 3,811 3,811

Margin and Bank Loan fees 3,933 3,933

Finance costs 1,016 1,016

Offer costs 717 717

Total applications of funds 41,772 189,093


44

8.

Financial

Information (cont.)

8.7 Statement of significant accounting

policies

Basis of preparation

The Financial Information has been prepared in

accordance with the Constitution, Australian

Accounting Standards, other mandatory professional

reporting requirements (Urgent Issues Group

Consensus Views), and the Corporations Act. The

Financial Forecasts and pro-forma Statements of

Financial Position are presented in an abbreviated

form insofar as they do not comply with all the

disclosures required by Australian Accounting

Standards applicable to annual reports prepared in

accordance with the Corporations Act. Unless

otherwise specified, the treatment of the following

items are the same under A-GAAP and A-IFRS.

Financial statements of the Trust will be prepared

under A-IFRS as outlined below. A-GAAP accounting

policies have been shown for comparative purposes.

Significant accounting policies adopted by MPT

(a) Rental income

A-GAAP: Rental income from operating leases is

brought to account when legally due and if not

received at balance date is reflected in the

Statement of Financial Position as a receivable or

if paid in advance, as rent in advance.

A-IFRS: Rental income from operating leases is

recognised on a straight line basis over the term

of the relevant lease.

(b) Investment properties

A-GAAP and A-IFRS: Investment properties

comprise investment interests in land and

buildings (including integral plant and equipment)

held for the purpose of producing rental income.

Investment properties are initially measured at

cost, being the purchase consideration determined

as at the date of acquisition plus expenditure

which is directly attributable to the acquisition of

the item. In the event that settlement of all or

part of the cash consideration given in the

acquisition is deferred, the fair value of the

purchase consideration is determined by

discounting the amounts payable in the future to

their present value as at the date of acquisition.

A-GAAP: Investment properties are measured at

their fair value at the end of each reporting date.

Revaluation increments are credited directly to the

asset revaluation reserve except to the extent the

increment reverses a decrement that was

previously recognised as an expense in the

Statement of Financial Performance in respect of

the same class of assets, in which case the

increment is recognised as revenue in the

Statement of Financial Performance. Net

revaluation decrements are recognised as an

expense in the Statement of Financial

Performance, except to the extent that the

decrement reverses a previous revaluation

increment in respect of the same class of assets

credit directly to the asset revaluation reserve, in

which case the decrement is debited directly to

the reserve to the extent that a credit exists in

respect of the same class of asset.

A-IFRS: Investment properties are measured at

their fair value at the end of each reporting date.

Gains or losses arising from changes in the fair

value of investment property are included in the

Statement of Financial Performance in the period

in which they arise.

(c) Depreciation

A-GAAP and A-IFRS: Investment properties are

not depreciated. The properties are subject to

continued maintenance and regularly revalued on

the basis set out above.

Significant accounting policies adopted by the

Trust

(a) Interest income

A-GAAP: Interest revenue is brought to account

when earned and if not received at balance date,

is reflected in the Statement of Financial Position

as a receivable.

A-IFRS: Interest revenue is recognised on a time

proportionate basis that takes into account the

effective yield on the financial asset.

(b) Borrowings

A-GAAP: The Bank Loan and other loans are

recorded at an amount equal to the net proceeds

received. Interest expense is recognised on an

accruals basis. Ancillary costs incurred in

connection with the arrangement of borrowings

are deferred and amortised over the period of the

borrowing.

A-IFRS: Borrowings are recorded initially at fair

value, net of transaction costs. Subsequent to

initial recognition, borrowings are measured at

amortised cost with any difference between the

initial recognised amount and the redemption

value being recognised in the Statement of


45

Financial Performance over the period of the

borrowing using the effective interest rate

method.

(c) Borrowing costs

A-GAAP and A-IFRS: Borrowing costs include

interest, amortisation of discounts or premiums

relating to borrowings and amortisation of ancillary

costs incurred in connection with arrangement of

borrowings. Borrowing costs directly attributable

to Buildings under construction are capitalised as

part of the cost of these assets.

(d) Derivatives

The Trust has entered into a variety of derivative

financial instruments to manage its exposure to

changes in interest rates. Derivative financial

instruments are not held for speculative purposes.

A-GAAP: Derivative financial instruments which

are designated as effective hedges of underlying

exposures are accounted for on the same basis as

the underlying exposure. Interest payments and

receipts under interest rate swap contracts are

recognised in the Statement of Financial Position

on an accruals basis, as an adjustment to

borrowing costs. Other interest rate swaps not

meeting the accounting requirements for hedges

are valued at reporting date and any gains and

losses are brought to account in the Statement of

Financial Performance.

A-IFRS: Derivatives are initially measured at fair

value on the date a derivative contract is entered

into and subsequently remeasured to their fair

value at each reporting date. The resulting gain or

loss is recognised in the Statement of Financial

Performance immediately unless the derivative is

designated as and is effective as a hedging

instrument, in which event the timing of the

recognition in the Statement of Financial

Performance depends on the nature of the hedge

relationship.

The Trust designates certain derivatives as hedges

of highly probable forecast transactions (cash flow

hedges). The effective portion of changes in the

fair value of derivatives that are designated and

qualify as cash flow hedges are deferred in equity.

The gain or loss relating to the ineffective portion

is recognised immediately in the Statement of

Financial Performance. Amounts deferred in

equity are recycled to Statement of Financial

Performance in the periods when the hedged item

is recognised in the Statement of Financial

Performance.

Hedge accounting is discontinued when the

hedging instrument expires or is sold, terminated

or exercised or no longer qualifies for hedge

accounting. At that time, any cumulative gain or

loss deferred in equity remains in equity and is

recognised when the forecast transaction is

ultimately recognised in the Statement of

Financial Performance. When a forecast

transaction is no longer expected to occur, the

cumulative gain or loss that was deferred in equity

is recognised immediately in the Statement of

Financial Performance.

Certain derivative instruments do not qualify for

hedge accounting. Changes in the fair value of

any derivative instrument that do not qualify for

hedge accounting are recognised immediately in

the Statement of Financial Performance.

Derivatives embedded in other financial

instruments or other host contracts are treated as

separate derivatives when their risk and

characteristics are not closely related to those of

host contracts and the host contracts are not

measured at fair value with changes in fair value

recognised in the Statement of Financial

Performance.

(e) Financial instruments issued by the Trust

A-GAAP: Debt and equity instruments are

classified as either liabilities or as equity in

accordance with the substance of the contractual

arrangement. Transaction costs arising on the

issue of equity instruments are recognised directly

in equity as a reduction of the proceeds of the

equity instruments to which the costs relate.

Transaction costs are the costs that are incurred

directly in connection with the issue of those

equity instruments and which would not have

been incurred had those instruments not been

issued.

A-IFRS: Debt and equity instruments are classified

as either liabilities or as equity in accordance with

the substance of the contractual arrangement.

Issued Units in the Trust are classified as liabilities

in accordance with AASB 132 Financial

Instruments: Disclosure and Presentation.


46

8.

Financial

Information (cont.)

(f) Investments in associates

A-GAAP and A-IFRS: Investments in associates,

which are those entities over which the Trust

exercises significant influence and which are not

intended for sale in the near future, are accounted

for using equity accounting principles.

Investments in associates are carried at the lower

of the equity accounted amount and the

recoverable amount. The Trust's equity accounted

share of the associate's net profit or loss is

recognised in the Statement of Financial

Performance from the date significant influence

commences until the date significant influence

ceases. The Trust's equity accounted share of the

associate's other movements in reserves is

recognised directly in reserves. MPT is an

associate of the Trust.

(g) Security Interest Holder unpaid call

A-GAAP and A-IFRS: The Security Interest Holder

unpaid call in respect of Units issued is only

recognised on Lease Commencement as it is not

payable until that time.

(h) Income tax

The Trust is not liable to pay income tax if all

Investors are presently entitled to all of the

income of the Trust. The Responsible Entity

intends to distribute all the income of the Trust, if

any, to Investors in accordance with the

Constitution.

(i)

GST

The Trust is registered for GST purposes and will

receive input tax credits for GST paid. Revenues,

expenses and assets are recognised net of the

amount of GST except:

- where the amount of GST incurred is not

recoverable from the taxation authority, it is

recognised as part of the cost of acquisition of

an asset or as part of an item of expense; and

- for receivables and payables which are

recognised inclusive of GST.

8.8 Key financial forecast assumptions

The major assumptions made in preparing the

Financial Forecasts are set out below. While the

Responsible Entity considers these assumptions to

be appropriate and reasonable at the time of

preparing this PDS, Investors should appreciate that

many factors which may affect results are outside the

control of the Responsible Entity and its directors or

may not be capable of being foreseen or accurately

predicted. Accordingly, actual results may vary

materially from the forecasts. Investors are advised to

review the assumptions and Financial Forecasts and

make their own independent assessment of the

future performance and prospects of the Trust.

The forecasts have been reviewed by Deloitte

Corporate Finance Pty Limited, which has prepared

the Independent Accountant's Report contained in

Section 12. Deloitte Touche Tohmatsu Ltd has

prepared a report on the taxation implications (refer to

Section 13). No person guarantees the future

performance of the Trust.

The Responsible Entity has prepared financial

forecasts for the Property based on expert reports

and its knowledge of the Property and the industry.

The Trust will have a 49% interest in MPT from Lease

Commencement and will recognise income from

MPT based on this ownership interest. As a result,

the forecast assumptions of MPT have a material

bearing on the Financial Forecasts. The key

assumptions underlying the Financial Forecasts are as

follows:

Assumptions relating to MPT

(a) Rental income

There are three sources of rental income for MPT

(which then pays interest on the loan from the

Trust until Lease Commencement and thereafter, a

distribution on the Trust’s Property Interest):

- for the period from Final Allocation to Lease

Commencement, Stockland Development will

lease the land from MPT to enable it to

develop the Property as described in Section

6.1; and

- for the period after Lease Commencement:

(i) Optus will lease the Property on terms

described in Section 6.2; and

(ii) to the extent that a neighbouring tenant

occupies some of the car parking spaces on

and has been granted a sub-lease over part

of the Property, Stockland Development will

guarantee the car parking licence fee that is

not otherwise payable by Optus. This is

described further in Section 5.7.


47

(b) Vacancies

As Optus will occupy 100% of the Property (to the

extent that a neighbouring tenant occupies some of

the car parking spaces on and has been granted a

sub-lease over part of the Property – refer Section

5.7) from the date of Lease Commencement, and

because the term of the Optus Lease extends

beyond the initial term of the Trust, there is not

expected to be any vacancy in the Property during

the initial term of the Trust. Therefore, no allowance

for vacancy has been made.

(c) Property outgoings

Property outgoings payable by MPT, other than the

Property management fee which is a function of

the rent payable by Optus (refer to Section 9.2.7),

are forecast to increase annually at 2.5% over the

Forecast Period. Under the terms of the Optus

Lease, outgoings are fully recoverable (refer to

Section 6.2).

(d) Property value

As result of changing market conditions, it is

difficult to reliably measure the fair value of the

Property. For the purposes of the Financial

Forecasts, it has been assumed that there will be

no movement in the fair value of the Property

during the Forecast Period.

Assumptions relating to the Trust

(a) Interest income

It has been assumed that interest income will be

earned on the Trust’s cash balances at the rate of

5.25% per annum over the Forecast Period.

(b) Borrowings and borrowing costs

Borrowing costs are based on the expected debt

profile and the letter of offer from the Financier,

which is summarised in Section 3.2.

(c) Amortised borrowing costs

There are three components to the amortised

borrowing costs:

- costs associated with establishing the facility

to allow Investors to receive the 90-day bank

bill rate during the period from Final Allocation

until Lease Commencement. This amount is

amortised over the period that the costs relate

to, pro-rated on a daily basis;

- costs associated with the establishment of the

Bank Loan (0.15% of the total facility amount

of $107,226,000) based on the Financier's

letter of offer (refer to Section 3.2). This cost is

amortised over eight years from Final

Allocation, pro-rated on a daily basis; and

- the prepayment of the margin on the Term

Loan Facility and line fee associated with the

Bank Loan (refer to Section 3.2). This is

amortised over the six year period that the

prepayment relates to, pro-rated on a daily

basis.

(d) Responsible Entity fees

The Responsible Entity will receive a Trust

establishment fee of $7,165,584, inclusive of GST

less input tax credits, upon Final Allocation,

calculated as 4% of the value of the Trust’s

Property Interest. This fee will be allocated and be

treated in the Statement of Financial Position

under A-GAAP and A-IFRS in the following ways:

Cost treatment Allocation ($'000) A-GAAP treatment A-IFRS treatment

Issue costs 65% 4,585 Deducted from Investor's Deducted from loan from

contributed equity.

unitholders.

Capitalised borrowing 25% 1,892 Treated as an asset and Deducted from borrowings.

costs

amortised over the life of the

Trust.

Capitalised acquisition 10% 688 Treated as an asset as a Treated as an asset as a

costs deferred acquisition cost up deferred acquisition cost up

until Lease Commencement, until Lease Commencement,

and then as part of the and then as part of the

investment in MPT.

investment in MPT.


48

8.

Financial

Information (cont.)

From Final Allocation, the Responsible Entity will

receive a fee of 0.46125% (inclusive of GST less any

reduced input tax credits) per annum of the gross

asset value of the Trust for performance of its duties

as the Responsible Entity. However, the Responsible

Entity may defer some of this fee. Details of the

Responsible Entity fee are set out in Sections 9.1 and

9.2. The Financial Forecasts assume the gross asset

value of the Trust's Property Interest is increased by

the Trust's share of the capital expenditure for the

Property.

(e) Trust expenses

The Responsible Entity will incur recurring

operating expenses including audit fees, custodian

fees, registry fees, valuation fees, security trustee

fees and annual reporting costs. These amounts

have been forecast by taking into account factors

likely to influence the level of these fees, charges

and costs including the Trust’s gross assets,

Property valuations and general inflationary

expectations based on an annual CPI increase of

2.5%.

(f) Contributed equity and unpaid call on Units

Investors will pay the First Instalment of $0.40 per

Unit on Application. SFML will use the proceeds

of the Offer to ensure that the Units are paid up to

$0.40 per Unit on or before the date of Final

Allocation. The Security Interest Holder (intended

to be Westpac by the date of Lease

Commencement) will pay the balance of the

unpaid call on Units ($0.60 per Unit) on Lease

Commencement.

(g) Loan to MPT

The Trust will use the funds raised through the

Offer and the first tranche of the Term Loan

Facility to make a loan to MPT on the date of Final

Allocation on which the Trust will receive interest

at the rate of 8.23% per annum.

(h) Investment in Ordinary Units in MPT

At Lease Commencement, the loan to MPT will

be repaid, and 49% of the Ordinary Units in MPT

will be issued to the Trust. The Ordinary Units in

MPT will entitle the Trust to a 49% interest in both

the income and capital of MPT together with an

entitlement to vote and participate in the winding

up of MPT.

(i)

(j)

Capital expenditure

Property capital expenditure is based on an

engineer and quantity surveyor’s estimate of

capital expenditure costs for the proposed new

Buildings, assuming completion on 1 July 2007.

The Trust’s share of forecast capital expenditure is

assumed to be funded entirely by the Capital

Expenditure Facility. The Capital Expenditure

Facility is greater than the Trust’s share of

estimates provided by the engineer and quantity

surveyor for the initial term of the Trust.

Offer costs

The costs of the Offer are estimated as follows:

Offer costs

($'000)

Proportion of Responsible Entity's fee attributable to the arranging of equity 1 4,585

Professional fees (legal, tax and accounting) 473

Marketing, research and printing costs 193

Registry set up costs 51

Total 5,302

Notes.

1. Part of this amount is paid out to cover the cost of underwriting and distributing the Offer.


49

(k) GST

It has been assumed that no GST is payable in

respect of distributions paid by the Trust.

(l)

All forecasts including income, fees, charges and

acquisition costs are shown inclusive of GST

except where the amount of GST incurred is

recoverable from the ATO.

Taxation

Given the nature of the Trust’s proposed

investment activities, the Trust will be subject to

trust taxation "flow through" provisions under

Australian tax legislation. Accordingly, by

distributing all of its income to its Investors, the

Trust does not incur a tax liability. Information on

tax consequences is provided in Section 13.

(m) Accounting standards

It has been assumed there will be no changes in

applicable accounting standards, the Corporations

Act or other financial reporting requirements that

may have a material effect on the Financial

Forecasts.

Interest and Fees on Final Instalment

As Investors will not be required to pay the Final

Instalment of $0.60 per Unit until the Final Instalment

Payment Date (expected to be 30 June 2013 except as

outlined in Sections 4.4 and 4.5), Investors are required

to pay Interest and Fees on the Final Instalment until

the Final Instalment Payment Date. The interest rate

on the Final Instalment is fixed at 6.79% per annum

until 30 June 2013. Part of the margin is being prepaid

and the line fee on the Final Instalment will be paid on

Lease Commencement. The interest rate shown

above of 6.79% per annum is prior to the prepayment.

Section 4.6 has further details of the Interest and Fees.

Other assumptions

Other assumptions that are implicit in the forecasts

are that:

- there will be no material changes in Australian

taxation or other legislation;

- there is no financial impact arising from the risk

factors outlined in the statement of risk factors

discussed in Section 10;

- there is no change of control in the ownership of

MPT; and

- the Optus Lease is enforceable and is performed

in accordance with its terms.

8.9 Taxation considerations

Deloitte has provided a report on the taxation

consequences of investing in the Trust in its Taxation

Report in Section 13.

8.10 Sensitivity analysis

Investors should note that:

- the effect on distributions presented for each

sensitivity is not intended to be indicative or

predictive of the low and high points likely to be

experienced with respect to each sensitivity;

- a movement in the opposite direction from that

shown for each assumption will result in a similar

effect on forecast to that shown, but in the

opposite direction, except to the extent that the

Responsible Entity may receive up to the full

0.46125% per annum management fee (as

disclosed in Section 9.2.1) provided this does not

reduce distributions in that year to below the

forecast distribution per First Instalment as

detailed in Section 8.4;

- each sensitivity assumes all other assumptions in

Section 8.8, other than those below, are held

constant; and

- the sensitivity assessments are intended to

provide a guide only and variations in actual

performance may have a greater impact than

detailed below. Movement in other assumptions

may offset or compound the effect of a change in

the Financial Forecasts, and due to the complexity

of the analysis, the Responsible Entity has not

forecast the combined effect of such movements.

The Responsible Entity has sought to minimise the

number of elements that could vary and impact

returns to Investors. For example, all substantial

interest rate exposures have been fixed and Optus is

committed to agreed rents for the Buildings

throughout the Forecast Period.

The following sensitivity analysis shows the return on

the First Instalment to Investors and the tax deferred

component of forecast distributions in each of the

years to 30 June 2009, based on variations in the CPI

as disclosed in Section 8.8, different levels of interest

rates as they relate to the Capital Expenditure Facility

(the interest rate on the Term Loan Facility has been

fixed until 30 June 2013), and different levels of

capital expenditure incurred.


50

8.

Financial

Information (cont.)

The consideration for the Property (refer to Section 5.4) is fixed and therefore Investors are not exposed to any

price variations.

Elements of the investment structure that may vary include:

(a) Date of Lease Commencement

If Lease Commencement is delayed beyond the expected date of 1 July 2007, Investors will continue to

receive distributions expected to be approximately equal to the 90-day bank bill rate as the net cash yield

on their First Instalment until Lease Commencement or until Investors receive their Application Monies

back (refer to Sections 7.7.2 and 7.7.3). Under this scenario, Investors would be disadvantaged to the extent

that the distribution payment is less than the net payment they would have received from the Trust's

distribution from MPT had the Optus Lease commenced as scheduled on 1 July 2007. The table below

shows the impact of a delay of one year in Lease Commencement:

Sensitivity to Lease Commencement date

Lease Commencement is delayed to 1 July 2008

Year ending 30 June 2006 2007 2008 2009

Change in distribution per First Instalment No change No change -1.80% Not

approximately applicable 2

Distribution per First Instalment 90-day bank 90-day bank 90-day bank

bill rate bill rate bill rate

(5.70% pa as at (5.70% pa as at (5.70% pa as at

27 June 2005) 27 June 2005) 27 June 2005)

Tax deferred component 100% 100% 100% Not

applicable 2

(b) Interest rates

The Responsible Entity has fixed interest rates on the $103.226 million Term Loan Facility whereas the

interest rate on the Capital Expenditure Facility ($3.0 million) is variable. Accordingly, reasonably foreseeable

fluctuations in interest rates are not considered to have a material effect on the distributions over the

Forecast Period, but are detailed below:

Sensitivity to interest rates on the Capital Expenditure Facility

Interest rates increase by 1% per annum

Year ending 30 June 2006 2007 2008 2009

Change in distribution per First Instalment No change 1 No change 1 0.00% 0.00%

Distribution per First Instalment 90-day bank 90-day bank 7.50% 7.55%

bill rate bill rate

(5.70% pa as at (5.70% pa as at

27 June 2005) 27 June 2005)

Tax deferred component 100% 100% 100% 100%


51

Sensitivity to interest rates on the Capital Expenditure Facility

Interest rates increase by 2% per annum

Year ending 30 June 2006 2007 2008 2009

Change in distribution per First Instalment No change 1 No change 1 0.00% -0.01%

Distribution per First Instalment 90-day bank 90-day bank 7.50% 7.54%

bill rate

bill rate

(5.70% pa as at (5.70% pa as at

27 June 2005) 27 June 2005)

Tax deferred component 100% 100% 100% 100%

(c) Capital expenditure

The distributions of the Trust will be impacted to the extent that the Trust is required to fund additional capital

expenditure, beyond the Capital Expenditure Facility, from net operating cash flows (refer to Section 8.8).

Although the Capital Expenditure Facility is greater than the Trust's share of estimates for the initial term of

the Trust provided by the engineer and quantity surveyor, the following table shows the sensitivity to the

distributions if any increase in capital expenditure was funded from net operating cash flows of the Trust:

Sensitivity to variances related to capital expenditure

Capital expenditure increases by 50%

Year ending 30 June 2006 2007 2008 2009

Change in distribution per First Instalment No change 1 No change 1 -0.07% -0.15%

Distribution per First Instalment 90-day bank 90-day bank 7.43% 7.40%

bill rate

bill rate

(5.70% pa as at (5.70% pa as at

27 June 2005) 27 June 2005)

Tax deferred component 100% 100% 100% 100%

Capital expenditure increases by 100%

Year ending 30 June 2006 2007 2008 2009

Change in distribution per First Instalment No change 1 No change 1 -0.13% -0.29%

Distribution per First Instalment 90-day bank 90-day bank 7.37% 7.26%

bill rate

bill rate

(5.70% pa as at (5.70% pa as at

27 June 2005) 27 June 2005)

Tax deferred component 100% 100% 100% 100%

Note to the sensitivity tables on date of Lease Commencement, interest rates and capital expenditure:

1. There is no change to the distribution per First Instalment for 2006 and 2007 as no capital expenditure is

expected to be incurred prior to Lease Commencement.

2. If Lease Commencement does not occur by 1 July 2008 or such longer period as approved by Investors by

Special Resolution, the Trust will be wound up and Investors will receive their Application Monies back in

full (refer to Sections 7.7.2 and 7.7.3).


52

9.

Fees

9.1 Fees and other costs

This section of the PDS shows fees and other costs that may be charged to Investors. All amounts are stated

inclusive of GST less any reduced input tax credits. These fees and costs may be deducted from Investors’

money, from the returns on an investment in the Trust or from the Trust assets as a whole.

Taxes are set out in Section 13.

You should read all of the information about fees and costs because it is important to understand their impact

on an investment in the Trust.

Type of fee or cost Amount How and when

Fees when your money moves in or out of the Trust

Establishment fee

The fee to open your investment

Contribution fee

The fee on each amount

contributed to your investment -

either by you or your employer

Withdrawal fee

The fee on each amount you take

out of your investment

Trust establishment fee of

$7,165,584 1 from which SFML

will pay Westpac's underwriting

and distribution fees

Services arranging fee of

$936,963 for professional adviser

costs and PDS production costs

Not applicable

No withdrawal fee

If the Limited Liquidity Facility is

used, 2.5% of the NTA per Unit

for each Instalment Receipt sold

plus transaction costs and a

processing fee of $110 per parcel

of Instalment Receipts

Trust establishment fee payable

from the assets of the Trust on

Final Allocation. It does not apply

to Investors who acquire

Instalment Receipts by way of

transfer after Final Allocation

Services arranging fee payable

from the assets of the Trust on

Final Allocation

Not applicable

Deducted from the purchase

price payable by Westpac under

the Limited Liquidity Facility

Termination fee

The fee to close your investment

Not applicable

Not applicable

1 This fee is calculated as 4% of the value of the Trust's Property Interest.


53

Type of fee or cost Amount How and when

Management costs

The fees and costs for managing

your investment 2

Management fee of 0.46125%

per annum of the gross asset

value of the Trust 3

Performance fee of between

1.025% and 2.050% of the Net

Sale Proceeds if the final

distribution per Unit is greater

than the Application Price by 6%

or more 4

Reimbursable costs and

expenses of approximately

0.26% per annum on average

over the Forecast Period of the

gross asset value of the Trust 5

Management fee calculated

monthly and payable from the

income of the Trust at the end of

each Quarter 6

Performance fee payable from

the assets of the Trust within the

earlier of the date 30 days after

the date the Responsible Entity

receives the proceeds of the sale

of the Trust's Property Interest, or

the date of the final return of

capital to Investors

Payable from the assets or

income of the Trust as incurred

Service fees

Investment switching fee

The fee for changing investment

options 7

Not applicable

Not applicable

2 This does not include Interest and Fees payable on the Final Instalment. See Section 9.2.3.

3 This fee is expressed as a percentage per annum (0.46125%) of gross assets of the Trust and equates to

approximately 0.85% per annum (inclusive of GST less any reduced input tax credits) on average over the

Forecast Period of net assets when liabilities are excluded.

4 See Section 9.2.2 for information on how the performance fee will be calculated.

5 This figure is an estimate only and does not limit the ability of the Responsible Entity to recover any

expenses it incurs in the proper performance of its duties as responsible entity of the Trust. See Section

9.2.5. This fee is expressed as a percentage per annum (0.26%) on average over the Forecast Period of

gross assets of the Trust and equates to approximately 0.40% per annum on average over the Forecast

Period of net assets when liabilities are excluded.

6 The Responsible Entity intends to defer payment of part of this fee. See Section 9.2.1.

7 The Responsible Entity may charge special request fees. See Section 9.2.4.


54

9.

Fees (cont.)

9.2 Additional explanation of fees and costs

In this section all amounts are stated inclusive of GST less any reduced input tax credits.

9.2.1 Deferral of management fee

The Responsible Entity intends to charge a management fee to the Trust equal to 0.46125% 1 per annum of the

gross assets of the Trust, calculated monthly and payable quarterly in arrears, but has agreed to defer up to

35% of this management fee until 30 June 2013:

- unless, following such deferral, the distributions from the Trust exceed the Financial Forecasts, in which

case it may receive up to the full 0.46125% per annum provided this does not reduce the distributions in

that year to below the forecast distribution per First Instalment;

- to the extent of any such deferral, the Responsible Entity may charge the amount in a subsequent year

provided that during the Forecast Period this does not reduce the distributions in that year to below the

forecast distribution per First Instalment, and after the Forecast Period, this does not reduce the distribution

in that year to below the distribution in the previous year; or

- until such time as the Trust terminates, at which stage it intends to receive the amount deferred and unpaid

from the assets of the Trust.

The management fee payable to the Responsible Entity is outlined below:

2006 2007 2008 2009

Management fee payable ($'000) ($'000) ($'000) ($'000)

Management fee (0.46125% per annum of 140 164 832 826

gross assets of the Trust) (as detailed in the Financial

Forecasts in Section 8.3)

Management fee deferred 0 0 291 289

Management fee paid and not deferred 140 164 541 537

The forecast distributions detailed in Section 8.4 includes the impact of this deferral of fees by the Responsible

Entity. In the event that the Trust outperforms the Financial Forecasts, it is likely that the deferral of

Responsible Entity fees will not occur.

9.2.2 Performance fee

A performance fee is payable to the Responsible Entity from the assets of the Trust within the earlier of the

date 30 days after the date the Responsible Entity receives the proceeds of the sale of the Trust’s Property

Interest, or the date of the final return of capital to Investors (Final Distribution). The performance fee is

calculated as follows:

If the Final Distribution per Unit is greater The performance fee payable to the Responsible

than the Application Price by:

Entity will be:

6%, but less than 18% 1.025% of the Net Sale Proceeds plus, for each additional 3% by

which the Final Distribution per Unit exceeds the Application Price

of the Unit, an additional 0.05125% of the Net Sale Proceeds.

18%, but less than 36% 1.230% of the Net Sale Proceeds plus, for each additional 6% by

which the Final Distribution per Unit exceeds the Application Price

of the Unit, an additional 0.27675% of the Net Sale Proceeds.

36% or more 2.050% of the Net Sale Proceeds.

1 This fee is expressed as a percentage per annum (0.46125%) of gross assets of the Trust and equates to

approximately 0.85% per annum (inclusive of GST less any reduced input tax credits) on average over the

Forecast Period of net assets when liabilities are excluded.


55

By way of a worked example (which is not a forecast, but indicative and for illustrative purposes only), assume

that Investors elect to terminate the Trust on 30 June 2013 and the Net Sale Proceeds of the Trust's Property

Interest is $208,000,000, prior to the deduction of the performance fee (this represents a Property growth rate

of 3.2% per annum). After repayment of the Bank Loan and other liabilities but before deducting the

performance fee, the Final Distribution is $93,600,000. The Final Distribution per Unit before deducting the

performance fee is therefore $1.09, calculated as $93,600,000 divided by the number of Units on issue, being

85,867,000.

As the Final Distribution per Unit is greater than the Application Price by 6%, but less than 18%, then the

performance fee payable to the Responsible Entity is $2,238,600 calculated as:

- 1.025% of the Net Sale Proceeds ($208,000,000), being $2,132,000; plus

- as the Final Distribution per Unit exceeds the Application Price by an additional 3% beyond the 6% initial

threshold, 0.05125% of the Net Sale Proceeds, being $106,600.

These calculations are set out below:

Illustrative example

Performance fee Per $25,000

Total

investment

Net Sale Proceeds before performance fee $208,000,000 $60,559

Final Distribution (after all selling costs and repayment of debt

but before deduction of performance fee) $93,600,000 $27,251

Final Distribution per Unit before deduction of performance fee $1.09 $1.09

Application Price per Unit $1.00 $1.00

Premium (extent to which Final Distribution per Unit exceeds

Application Price per Unit, before deduction of performance fee) 9.00% 9.00%

Base performance fee $2,132,000 $621

1.025% of Net Sales Proceeds if premium is equal to or greater than 6.00%

Additional performance fee $106,600 $31

0.05125% of Net Sales Proceeds for every 3.00%

by which the premium exceeds 6.00%

Total performance fee payable $2,238,600 $652

Final Distribution

(after all selling costs, repayment of debt and deduction of performance fee) $91,361,400 $26,599


56

9.

Fees (cont.)

9.2.3 Interest and Fees on the Final Instalment

Investors have an obligation to pay quarterly Interest

and Fees on the Final Instalment until the Final

Instalment Payment Date as follows:

- interest relating to the Final Instalment to be paid

quarterly to the Security Interest Holder from

Lease Commencement on the first Business Day

following the end of each Quarter from Investor

distributions. The interest rate on the Final

Instalment is fixed at the rate of 6.79% per

annum until 30 June 2013, of which 0.50% per

annum is intended to be prepaid on a present

value basis for the term of the Final Instalment at

Lease Commencement;

- an establishment fee relating to the Final

Instalment to be paid to the Security Interest

Holder from the first distribution payable to

Investors for the Quarter ending 31 December

2005. The establishment fee is 1.00% of the Final

Instalment; and

- a line fee relating to the Final Instalment to be

paid to the Security Interest Holder on the first

Business Day following the first Quarter after

Lease Commencement. The line fee is 0.25% per

annum of the Final Instalment from Final

Allocation to Lease Commencement and will

accrue interest at the rate of 0.25% per annum of

the unpaid line fee from Final Allocation until the

line fee and accrued interest is paid.

All Interest and Fees will be deducted by the Security

Trustee from Investors’ entitlement to receive gross

distributions. The Financial Forecasts in Sections 1,

8.3 and 8.4 are calculated after deducting any Interest

and Fees relating to the Final Instalment.

9.2.4 Special request fees

The Responsible Entity may require an Investor to pay

any cost incurred by the Responsible Entity as a

result of that Investor’s act or omission. For example,

if an Investor requests that the Trust’s Property

Interest be valued at a time not considered necessary

by the Responsible Entity.

9.2.5 Maximum fees under the Constitution

The Constitution provides that the Responsible Entity is

entitled to the following maximum fees (GST exclusive):

- establishment fee of 5% of the value of the Trust’s

Property Interest, calculated by reference to the

valuation included in Section 11, payable on Final

Allocation;

- services arranging fee of $1,250,000, payable on

Final Allocation;

- management fee of 1% per annum of the gross

value of the assets of the Trust, calculated monthly

and payable out of the assets of the Trust at the

end of each Quarter; and

- performance fee as described in Section 9.2.2.

The Constitution also provides that, subject to the

Corporations Act, the Responsible Entity is entitled to

be reimbursed out of the assets of the Trust for any

expense that it incurs in the proper performance of its

duties as responsible entity of the Trust.

The Responsible Entity currently intends to charge the

fees set out in the Section 9.1. The Responsible

Entity reserves the right to change the fees that it

charges on 30 days’ written notice to Investors.

9.2.6 Transaction costs

The Constitution authorises the Responsible Entity to

include transaction costs in the calculation of the

application and redemption prices of Units. The

Responsible Entity does not intend to charge

transaction costs.

9.2.7 MPT fees

The Trust will be charged fees on its investment in

MPT. These will be approximately 0.11% per annum

on average over the Forecast Period of the gross

asset value of the Trust (which equates to

approximately 0.23% per annum on average over the

Forecast Period of net assets when liabilities are

excluded).

STML, as responsible entity of MPT, will be paid a

management fee of 0.15% per annum (exclusive of

GST) of the gross asset value of MPT (which has

been included in the Financial Forecasts) plus 50% of

any additional rent paid by Optus for leasing the

passageways (as described in Section 6.2). These

fees will be paid monthly in arrears from the income

of MPT.

Stockland Property Management Pty Limited has

been contracted by MPT to undertake the services of

property manager for 0.5% of the aggregate of rent

and outgoings payable by Optus plus approximately

$200,000 per annum for building supervision salaries

and services, which are both fully recoverable

outgoings from Optus.


57

9.2.8 Worked examples

Set out below are worked examples of the fees and other costs that you may be charged. These fees and

costs may be deducted from your money, from the returns on your investment or from the assets of the Trust

or MPT.

For an investment of $25,000

Fee or cost Percentage (if applicable) (First Instalment of $10,000)

Trust establishment fee $2,086

Services arranging fee $273

Withdrawal fee 2.5 % NTA + $110 $685 (E) 1

per parcel

Trust management costs 0.46125% per annum of gross $100 per annum (plus $42 per annum deferred

assets of the Trust

on average over the Forecast Period - see

Section 9.2.1) (E)

Performance fee See Section 9.2.2

Trust reimbursable costs 0.26% per annum of gross $39 per annum on average over

and expenses assets of the Trust on average the Forecast Period (E)

over the Forecast Period (E)

Establishment fee for the $150 (see Section 9.2.3)

Final Instalment

Line fee on the Final Instalment $70 (see Section 9.2.3)

Annual interest on the $944 per annum (see Section 9.2.3)

Final Instalment

MPT management costs

$36 per annum on average over the Forecast

Period (see Section 9.2.7)

MPT reimbursable costs 0.04% per annum of gross $9 per annum on average over the Forecast

and expenses assets on average over the Period (E)

Forecast Period (E)

Notes.

1 Calculated using the Net Tangible Assets of the Trust at Lease Commencement ($0.920 per Unit).

(E) indicates an estimate.

9.2.9 Adviser service fees

An upfront commission fee of up to 5% plus GST of the First Instalment of your Application may be paid

directly to your professional financial adviser by Westpac. No adviser service fee is payable following a transfer

of Instalment Receipts.

9.2.10 Differential fees

The Responsible Entity may individually negotiate investor specific fees with wholesale investors, such as

master trusts or wrap platforms. The charging of differential management fees will be subject to compliance

with legal requirements and the conditions of any applicable ASIC relief.

9.2.11 Impact of fees on your investment returns

Investors seeking to assess the impact that fees will have on their investment returns should speak with their

financial adviser or visit www.asic.gov.au, where ASIC offers a free calculator to help investors compare the

fees of different products.


58

10.

Risk Factors

10.1 Introduction

The performance of the Trust and Units will be

influenced by a range of factors, many of which are

outside the control of the Responsible Entity and its

directors. The level of income and capital distributions,

the value of the Property and the tax deferred

component of any distributions may be reduced by

any of these factors.

Applicants should also be aware that an investment in

the Trust represents an investment in the Trust’s

equity and therefore ranks last for payment, after both

secured and unsecured creditors of the Trust have

been paid, in the event the Trust is terminated or

wound up. In this event, Investors will only receive a

return of capital following the repayment of secured

and unsecured creditors. In extreme circumstances,

Investors may lose all of their capital invested. The

Constitution contains provisions designed to limit an

Investor’s liability to the amount which remains

unpaid in relation to the subscription of Units, if any.

The Trust’s borrowings and the Final Instalment will

increase Investors’ exposure to unforeseen events or

risk factors, a summary of which are set out in this

Section 10.

10.2 Risks prior to Lease

Commencement

Construction

During the construction of the Buildings, Investors will

be protected from all development risks (such as

increases in construction costs, delayed or no

completion).

MPT will pay Stockland Development, a related entity

of the Responsible Entity, a fixed price for the

development of the Property, regardless of whether

the costs of construction increase or completion of

the development is delayed. This is detailed in

Section 5.4.

Stockland Development has contracted to construct

84,000 sqm of Building area for Optus. If the area of

the Buildings on completion is:

- equal to or greater than 84,000 sqm in accordance

with the Optus Lease, the rent payable by Optus

will be based on 84,000 sqm (and the price

payable under the Turn-Key Development Deed for

the Buildings remains fixed);

- less than 84,000 sqm but more than 79,800 sqm

(a 5% tolerance level), then Optus will pay rent

based on the actual Building area and Stockland

Development will guarantee MPT the difference

between the actual rent payable by Optus and the

rent based on 84,000 sqm of Building area under

the Optus Lease until such time as at least 84,000

sqm of Building area has been constructed (and

the price payable under the Turn-Key Development

Deed for the Buildings remains fixed). Stockland

Development will also guarantee the capital

amount of the shortfall of net lettable area upon

sale of the Trust’s Property Interest; or

- less than 79,800 sqm, Optus has the right to

terminate the Agreement for Lease, in which case

the Trust will be wound up and Investors will

receive their Application Monies back in full as

described in Sections 7.7.2 and 7.7.3

If the Property is not completed by 1 July 2008 or

such longer period as approved by Investors by

Special Resolution or Optus terminates the

Agreement for Lease, the Trust will be terminated and

Investors will receive their Application Monies back.

Stockland Trust will guarantee to MPT to subscribe for

ordinary units in MPT or lend money to MPT which is

sufficient to enable MPT to repay the Trust's loan,

whilst Stockland Corporation will indemnify the Trust

in respect of any shortfall in the return of the First

Instalment to Investors from terminating the Trust.

Details of these agreements are provided in Sections

7.7.2 and 7.7.3.

Guarantee provider defaulting

As a result of the guarantee and indemnity provided

by Stockland Trust and Stockland Corporation which

are referred to above, during the construction of the

Buildings, Investors are exposed to the risk of

Stockland not being able to honour its obligations

under the relevant guarantees. Stockland is rated

A- stable by Standard & Poor’s (refer to Section 15.10).

"Widely held" test for Units

The Responsible Entity will monitor the Applications

to ensure that the Trust is "widely held" for the

purposes of the Duties Act 1997 (NSW) (Duties Act).

To be "widely held", the Trust must have more than

300 Investors and no one Investor can beneficially

hold more than 19.9% of the Units on issue. A risk

exists that the Underwriters may have to purchase

Instalment Receipts, and therefore acquire a

beneficial interest in Units, if a shortfall exists, where,

upon acquisition, they individually hold more than

19.9% of the Units. Alternatively, there may be less

than 300 Investors. If the Trust is not "widely held",


59

the Trust may be liable for stamp duty when it

acquires its Ordinary Units in MPT upon Lease

Commencement. Accordingly, if the Trust is not

"widely held" by Lease Commencement, then the

Trust will be terminated, and Investors will receive

their Application Monies back in full.

Wholesale unit trust scheme test for MPT

MPT must be a "wholesale unit trust scheme" for the

purposes of the Duties Act from Lease

Commencement. This means that MPT must have at

least three unitholders, 80% of which are "qualifying

investors" for the purposes of the Duties Act.

Stockland Trust and the Trust will be "qualifying

investors", who in aggregate, intend to hold at least

80% of the ordinary units in MPT from Lease

Commencement.

Stockland Trust is negotiating with a Wholesale

Investor to acquire up to 20% of the ordinary units in

MPT. If these negotiations are not concluded by the

date of Final Allocation, Stockland Trust intends to

acquire 51% of the ordinary units in MPT and sell up

to 20% of the ordinary units on issue to a Wholesale

Investor by Lease Commencement. If Stockland Trust

cannot sell at least 1% of the ordinary units on issue

in MPT by Lease Commencement, the Trust will be

terminated, and Investors will receive their Application

Monies back in full.

10.3 Risks following Lease

Commencement

Single asset and single source income risk

After Lease Commencement, the Trust's primary

asset will be an indirect 49% interest in six campusstyle

office buildings in Macquarie Park. Accordingly,

the Trust is exposed to movements in the Macquarie

Park property market, particularly upon sale of the

Trust's Property Interest following a resolution by

Investors to terminate the Trust, and therefore may be

considered more risky than a diversified property

trust. The key terms of the Optus Lease, being fixed

rental income (except upon the sixth anniversary of

the Optus Lease where there is a market review of

the rent with a maximum rental increase of 6% and a

maximum rental decease of 3% from the previous

year's rent) and staggered initial lease terms of 14, 15

and 16 years, partially mitigate property market risk

for the term of the Optus Lease. Section 6.2 contains

further details on the Optus Lease and Section 11

contains further details on the Macquarie Park

property market.

Abatement of rent

Optus has the right to abate rent in circumstances

that were not caused by Optus to the extent that the

Property is damaged in whole or in part and the

Property becomes substantially unfit for occupation

and use by Optus or is substantially inaccessible.

Insurance may not cover all of these events.

Financial strength of the tenant and the Guarantor

of the Optus Lease

From Lease Commencement, Optus will be the sole

tenant of the Property. As the Trust derives the

majority of its income from its 49% interest in MPT

(which owns the Property), the distributions made to

Investors after Lease Commencement will be highly

dependent on the ability of Optus to continue to pay

rent. If Optus is unable to meet these rental

obligations, the guarantee provided by SingTel Optus

Pty Limited, an entity rated A+ stable by Standard &

Poor’s (refer to Section 15.10), will be called upon. If

the Guarantor of the Optus Lease fails to maintain a

Standard & Poor’s credit rating of not less than BBB+,

then the Guarantor of the Optus Lease must provide

MPT with an irrevocable and unconditional bank

guarantee (without an expiry date) for an amount

equal to one year’s rent, outgoings and cleaning

charges. If Optus fails to make rental payments and

should SingTel Optus Pty Limited be unable to meet

these obligations either personally or through the use

of the bank guarantee, distributions to Investors will

be disrupted.

Optus may assign the lease to a company that is a

related entity of Optus or the Guarantor of the Optus

Lease. However, SingTel Optus Pty Limited remains

the Guarantor of the Optus Lease.

Capital expenditure requirements and unforeseen

Property expenses

The Financial Forecasts include an allowance for the

Trust’s 49% share of the capital expenditure funding

requirements of the Property over the Forecast Period.

A Capital Expenditure Facility of $3.0 million (and an

Overdraft Facility of $1.0 million) has been obtained

from the Financier to meet this forecast funding

requirement to 30 June 2009 and any further capital

expenditure incurred from 1 July 2009 to 30 June 2013.

There is a risk that unforeseen additional capital

expenditure requirements may require additional

funding beyond the amount available under the

aggregate of the Capital Expenditure Facility and

Overdraft Facility. If the Trust cannot raise funds from

an alternative source, the amount of distributions

from the Trust to Investors may reduce.


60

10.

Risk Factors

(cont.)

To the extent that unforeseen additional funding

requires an additional capital contribution by the

unitholders of MPT, and one of those unitholders is

unable or unwilling to contribute such capital, then

that unitholder may be required to offer their interest

in MPT for sale under the default provisions of the

proposed MPT Investors’ Deed, with a first right to

purchase held by the non-defaulting unitholders.

The Responsible Entity is not aware of any expenses

that may need to be incurred in respect of the Trust’s

Property Interest over the Forecast Period that have

not already been assumed in the Financial Forecasts.

A sensitivity analysis showing the impact of increases

in capital expenditure requirements is provided in

Section 8.10.

The risk of large amounts of unforeseen capital

expenditure arising following Lease Commencement

is mitigated by the fact that the Property will be

newly built and building warranties will be available for

at least 12 months.

Bank Loan availability

Formal documentation relating to the Bank Loan is yet

to be finalised. Based on the letter of offer provided

by the Financier and accepted by the Responsible

Entity, the Bank Loan will have a number of

conditions precedent to drawing down the loan.

These include the provision of a certificate of practical

completion for the Buildings, documentation to the

reasonable satisfaction of the Financier and

completion of another independent valuation of the

Property on Lease Commencement. A risk exists

that documentation may not be signed or be different

from that disclosed in this PDS, any one of the

conditions precedent may not be satisfied or the

value of the Property drops to less than $324.25

million (a decrease of 7.65%), in which case the

Responsible Entity may have to renegotiate the Bank

Loan or wind up the Trust. Investors may receive less

than their Application Monies.

Bank Loan default

The Bank Loan will contain a number of financial

covenants with which the Trust will need to comply

during the term of the Bank Loan. These include an

interest cover ratio (earnings before interest,

depreciation and tax divided by the amount of interest

payable to the Financier) of 120% and a loan-tovaluation

ratio (principal amount of the Bank Loan

divided by the valuation of the Property) of 70%. If

any of these covenants are breached (for example,

the value of the Property decreases), the Financier

will be entitled to enforce its security if the breach is

not rectified and sell the Trust’s Property Interest

resulting in the Trust being wound up. Investors may

receive more or less than their Application Monies.

Interest rates

The following interest rate risks are associated with

the Offer, and have been considered in the sensitivity

analysis in Section 8.10:

- the Responsible Entity has entered into an

interest rate swap agreement to fix the rate of

interest on the Term Loan Facility for its term. This

agreement provides for flexibility around the date

of Lease Commencement and therefore the

timing relating to the drawdown of the second

tranche of the Term Loan Facility. Accordingly,

there is no exposure to any changes in interest

rates (either the underlying rate or the margin)

during the period of the Term Loan Facility

assuming the facility is not in default and that a

review event does not occur;

- notwithstanding that the Term Loan Facility

interest rate is effectively fixed, changes in

interest rates may affect the attractiveness of the

Trust to Investors when compared to other

investment assets. A decline in interest rates is

likely to have little benefit on the borrowing

expenses of the Trust, other than due to the

variable rate attributable to the Capital Expenditure

Facility (refer below); and

- the Capital Expenditure Facility is subject to a

variable rate of interest (comprising a variable

underlying rate and a fixed margin) for the term of

the facility. The Financial Forecasts assume an

average interest rate of 6.20% per annum as it

relates to this facility, and that the facility will be

progressively drawn over the Forecast Period

(refer to Section 8.8).

Refinancing

The term of the Bank Loan ends on 30 June 2013

(coinciding with the initial term of the Trust); however

the Financier may terminate the Bank Loan earlier

than 30 June 2013 if a facility is in default or if there is

a Change of Control. If the Financier terminates the

Bank Loan, or Investors resolve to extend the term of

the Trust (see Section 3.4), the Trust may be required

to refinance the Bank Loan and there is no guarantee

that new facilities may be obtained at competitive or

comparable interest rates, if at all. If the Bank Loan

cannot be entirely refinanced on termination or expiry,


61

the Responsible Entity may be required to raise

additional equity to reduce the level of the new loan

facilities held by the Trust. This may impact the returns

achieved by Investors and the amount of Trust

distributions.

Westpac will provide the Bank Loan to the Trust. In

the event that there is a Change of Control of the

Trust or a change in the Responsible Entity, then the

facilities provided by Westpac may be terminated. It

is market practice and a matter of prudent credit

standards that the provider of the Bank Loan has the

option to terminate it where there is a Change of

Control of the Trust.

The other key default events under the Bank Loan

include:

- termination or winding up of the Trust;

- a capital distribution or reduction of capital made

from the Trust’s assets without the consent of the

Financier; and

- a default under any other material contract relating

to the Offer.

Property vacancy

The Financial Forecasts assume that Optus will

remain the tenant of the Property until lease expiry.

There are three leases of 14, 15 and 16 years

respectively. Each lease is for two of the six

Buildings. Optus can elect to vacate the Property

prior to the expiry of the leases without fully

compensating MPT under the following

circumstances:

- Partial termination - Optus has the right to

surrender Building A (including 356 undercover

and 18 uncovered car spaces) after providing not

less than 18 months' prior written notice. In the

event that this option is exercised, the lease

applicable to Buildings A and B will be varied to

apply only to Building B with appropriate

adjustments in rent and outgoings made in

proportion to the surveyed areas of Buildings A

and B. Optus will hand back the exclusive

common area and pay for works associated with

separating the two Buildings and make good

Building A; and

- Default by the lessor - Termination following a

default by MPT under the Optus Lease.

In the event of termination or partial termination, the

vacant space may:

- not be re-let;

- be re-let on less favourable terms to MPT and/or

require the payment of an incentive to the

incoming tenant;

- be let to a number of tenants which requires more

area to be used as common area where no rent is

payable; or

- be let to a tenant with a lower financial standing

than Optus.

Any of these scenarios will detrimentally affect

distributions to Investors.

Insurance

The Responsible Entity will endeavour to maintain, or

cause MPT to maintain, adequate insurance for the

Property. However, the availability of appropriate

insurance cannot be known with certainty.

There are a number of exclusions to many insurance

policies which are typical for commercial properties

including war, nuclear/biological perils, care custody

and control, and contamination/remediation.

In the event of damage to the Property as a result of

one of the above exclusions, under the Optus Lease,

MPT (of which the Trust will own 49%) will be liable

for the rectification and replacement of the assets.

Any such costs may have an impact on the

distributions and returns to Investors.

At and from Lease Commencement, MPT will

endeavour to insure the Property, however the

availability of appropriate insurance cannot be known

with certainty. Insurance costs will be borne by Optus

under the Optus Lease.

Environmental factors

The Property is currently being developed, which

involves the demolition of existing buildings on the

Property, excavation of certain areas of the Property

for the basement car parking, and the construction of

the Buildings. Stockland Development, as developer

of the Property, is responsible for the environmental

risk until the date of Lease Commencement.

After Lease Commencement, MPT is responsible for

the environmental risk on the Property, unless it was

caused by Optus. The Trust will own 49% of the

Ordinary Units in MPT after Lease Commencement.


62

10.

Risk Factors

(cont.)

Given the Property is being excavated in certain areas

for the basement car parking during the construction

of the Buildings, the risk of identifying contamination

is low.

MPT Investors' Deed

The Trust intends to be a party to the proposed MPT

Investors' Deed which will govern the relationship

between the three unitholders of MPT. There are a

number of provisions in the proposed MPT Investors'

Deed that provide for a defaulting party to offer its

ordinary units in MPT for sale to the other two nondefaulting

parties (refer to Section 15.3). One of the

three unitholders may be in default because, for

example, they have not subscribed for their proportion

of additional ordinary units in MPT (the Trust's

proportion is 49%). The unitholders may have to

subscribe for additional ordinary units or MPT may

borrow funds to meet capital expenditure for the

Property. MPT intends to obtain a $10 million standby

bank facility to meet such obligations where any

unitholder defaults on its obligation to subscribe for

further ordinary units in MPT for capital expenditure

requirements. If MPT borrows money under this

facility, MPT will be liable to pay interest on these

borrowings which may adversely affect the returns to

Investors.

The Trust may be exposed to legal action if there is a

dispute between the parties or the Trust may breach

the proposed MPT Investors' Deed and be in default,

in which case it may have to offer its Ordinary Units in

MPT for sale to the other non-defaulting parties as

described in Section 3.5. In these circumstances, the

Trust will be wound up. There is a risk that a

defaulting unitholder in MPT may not be able to sell

its ordinary units in MPT, and ultimately may not be

able to fulfil its obligations under the proposed MPT

Investors' Deed.

10.4 Risks relating to Instalment

Receipts

Ability of superannuation funds to invest

The report in Section 14 prepared by Mallesons

Stephen Jaques states that the arrangement

described in the Offer is not a prohibited “borrowing”,

but there is a risk that APRA or the ATO may take a

different view. In published material APRA has

acknowledged the distinction between a loan and an

instalment purchase arrangement where recourse of

the seller on default by the purchaser is limited to the

proceeds of sale of the asset. Under the

arrangement described in the Offer, the Security

Interest Holder is entitled, in given circumstances, to

recover unpaid money plus interest, fees, expenses

and taxes if the Investor does not pay the Final

Instalment. Neither APRA nor the ATO has publicly

commented on this concept and there is a risk that

they may take a contrary view.

High effective gearing

Investors will have an effective Gearing Ratio of 90%

on Final Allocation when the Final Instalment is

aggregated with the Bank Loan. The level of effective

gearing may change depending on the drawn balance

of the Bank Loan, the Final Instalment and the

carrying value of the Trust’s gross assets. While the

interest rate on the Final Instalment is fixed, the

effect of the additional gearing cannot only enhance

returns, but can also result in any losses being

magnified to a level where the Investor can

experience a loss of some or all of their Application

Monies and still remain liable to pay Interest and Fees

and the Final Instalment, together with default

interest and other costs.

Early payment of Final Instalment

Under the terms of the Security Trust Deed, there are

a number of events that may lead to the early

payment of the Final Instalment. These events are set

out in Section 4.4.

Should any of these events occur and the Final

Instalment is not refinanced, the Final Instalment may

be required to be paid before 30 June 2013. Investors

would be given notice of the payment becoming due.

Final Instalment interest rates

An investment in the Trust contains gearing in the

form of the Final Instalment. The Final Instalment has

interest charged at a fixed rate of 6.79% per annum

for the period to 30 June 2013. This means Investors

interest exposure is limited to:

- the risk that this fixed rate becomes an

unattractive interest rate due to market rates

falling below this level. Investors will not be able

to refinance the Final Instalment; and

- the early payment of the Final Instalment (see

Section 4.4) potentially giving rise to break costs

or benefits (in addition to the Final Instalment) that

are unquantifiable in advance.


63

Liability of Investors if Investors default

If an Investor does not pay the Final Instalment when

due then the Security Interest Holder can exercise its

right to sell the Units in which the Investor has a

beneficial interest. If the proceeds from the sale of

Units, less any sales expenses, are insufficient to

repay the Investor’s obligations to the Security

Interest Holder then the Investor will remain liable for

the outstanding balance.

10.5 General risks

Taxation

A deduction for Interest and Fee payments made by

Investors on the Final Instalment is likely to be

available where the purpose of the Investor in

investing in Instalment Receipts, and subsequently

Units, is for the derivation of future assessable

income (other than capital gains) in excess of the

amount of these deductions. In determining whether

a deduction is available for Interest and Fee

payments, Investors will need to have regard to the

purpose of their investment, their source of funding

for the First Instalment and the period they intend to

hold the investment. The Commissioner of Taxation

may seek to deny some part, or all, of the interest on

the Instalment Receipt if the requisite purpose cannot

be established.

If an Investor decides to sell its investment in the

Trust before the taxable distributions exceed the

Interest and Fees deductions, this might raise

questions as to whether the Units were acquired for

the purpose of producing assessable income,

depending on the Investor’s particular circumstances.

The Commissioner of Taxation may seek to deny

some part, or all, of the Interest and Fees on the Final

Instalment if the requisite purpose cannot be

established.

On 16 April 2003, the Treasurer announced in Press

Release No. 19 that legislation would be introduced to

amend the Income Tax Assessment Act 1997 to

ensure that part of the expense on a capital protected

product is attributable to the cost of the capital

protection feature resulting in part of the interest

expense not being deductible. The legislation is yet to

be introduced and a capital protected product is yet to

be defined. However, the indication from the

Treasurer’s Press Release was that limited recourse

loans for the purchase of shares and/or units would

be within the scope of the provisions.

Applicants should refer to Sections 4.7 and 13 and

seek independent advice from a taxation adviser in

light of their individual circumstances.

Financial Forecast assumptions

Although the Responsible Entity has endeavoured to

ensure that the assumptions made in the Financial

Forecasts are reasonably based, there are a number

of factors which may affect the achievement of those

forecasts. Investors should carefully review the

assumptions and Financial Forecasts and make their

own assessment on the future performance of the

Trust.

Changes in laws and government policy

Government legislation, including changes to the

taxation system, as it affects Trust distributions and

property investments may affect future earnings and

the relative attractiveness of investing in the Trust.

Changes in government policy (such as taxation)

and/or statutory changes (such as tenancy laws) may

affect the Trust or the Property and the attractiveness

of an investment in the Trust.

Economic conditions

Demand for properties of this type from both property

occupiers and investors will be important in

determining the level, if any, of income and capital

growth of the Trust’s Property Interest. Changes in the

economy and market conditions may affect such

demand and therefore property values, including the

value of the Property.

Liquidity

Other than the Limited Liquidity Facility provided by

Westpac, there is no formal secondary market or

redemption facility for the buying and selling of

Instalment Receipts. Investors will be required to hold

their Instalment Receipts until the Trust is wound up

or another exit mechanism is effected, unless

Investors are able to find their own buyer and

negotiate a sale price for their Instalment Receipts or

participate in the Limited Liquidity Facility. The

Limited Liquidity Facility may be terminated at any

time without notice to Investors under certain

circumstances. Section 3.7 has more details on the

Limited Liquidity Facility.


64

11.

Valuation Report


66

11.

Valuation Report (cont.)


68

12. Financial Services Guide and

Independent Accountant's Report


70

12. Financial Services Guide and

Independent Accountant's Report (cont.)


72

12. Financial Services Guide and

Independent Accountant's Report (cont.)


13.

Taxation Report

73


74

13.

Taxation Report (cont.)


76

13.

Taxation Report (cont.)


78

13.

Taxation Report (cont.)


14. Legal Report for

Superannuation Investors 79


80

14. Legal Report for

Superannuation Investors (cont.)


15.

Additional

Information

81

15.1 Constitution of the Trust

Constitutional framework

The Trust is a registered managed investment

scheme. The responsible entity of the Trust is

Stockland Funds Management Limited. The main

rules governing the operation of the Trust are set out

in the Constitution.

The Constitution is supplemented by the Corporations

Act, the modifications and exemptions made by ASIC,

and the general law of trusts.

The Responsible Entity must comply with all of the

obligations imposed by the Constitution and the

general law in administering the Trust. The Trust has a

Compliance Plan that sets out the measures that the

Responsible Entity will apply in operating the Trust to

ensure that it complies with these obligations.

A copy of the Constitution is available for inspection

at the Responsible Entity’s registered office during

business hours.

Summary of the Constitution

The main provisions of the Constitution that deal with

the rights and obligations of unitholders are:

- distributions: subject to the terms of issue of

particular units, unitholders are entitled to be paid

distributions from the Trust's income proportionate

to their unitholding. The Responsible Entity will

pay distributions within two months of the end of

the relevant period. It is expected that

distributions will be calculated quarterly;

- Units: a fully paid Unit confers an equal undivided

interest in the beneficial interest of the Trust. A

partly paid Unit confers an interest of the same

nature less the amount remaining to be paid up on

the Unit;

- meetings: the rights of unitholders to requisition,

attend and vote at meetings are mostly prescribed

by the Corporations Act. The Constitution provides

that the quorum for a meeting is normally two or

more unitholders holding at least 10% of all Units;

- transfer: unitholders may transfer Units in any

form approved by the Responsible Entity;

- no redemption: unitholders do not have a right to

redeem Units while the Trust is illiquid. The Trust

is illiquid if less than 80% of its assets are cash

and marketable securities. It is expected that the

Trust will be illiquid. If the Trust becomes liquid,

unitholders have a right to redeem Units on 60

days' written notice;

- winding up: the net proceeds of the Trust will be

distributed to unitholders proportionate to their

unitholdings; and

- liability: a unitholder is liable for expenses that the

Responsible Entity incurs as a result of their

individual act or omission. The liability of each

unitholder is otherwise limited under the

Constitution to any amount that remains unpaid in

relation to their Units, although higher courts are

yet to determine the effectiveness of provisions of

this kind.

The Constitution also deals with the powers, duties

and liability of the Responsible Entity:

- powers: the Responsible Entity has the power to

borrow, invest and generally manage the Trust.

The Responsible Entity also has the power to

issue Units and options over Units on such terms

as it determines, although the Constitution

contains specific provisions concerning the pricing

of Units;

- duties: the Responsible Entity's duties are mostly

prescribed by the Corporations Act. These include

the duty to act honestly and in the best interests

of unitholders and to exercise the degree of care

and skill that a reasonable person would exercise

if they were in the Responsible Entity's position;

- fees: the Responsible Entity is entitled to be paid

fees from the Trust. These fees are disclosed in

Section 9. The Responsible Entity may accept

lower fees than it is entitled to receive under the

Constitution, or may defer payment for any period;

- expenses: subject to the Corporations Act, the

Responsible Entity is entitled to be reimbursed

out of the assets of the Trust for all expenses

incurred in relation to the proper performance of

its duties. Such expenses include, but are not

limited to: expenses connected with the

acquisition, disposal, insurance or custody of the

Trust's assets; expenses connected with

borrowing arrangements on behalf of the Trust;

and fees paid to agents, advisers, contractors and

valuers, irrespective of whether they are

associates of the Responsible Entity. The

Responsible Entity is also entitled to be

reimbursed for any GST paid in relation to such

expenses;


82

15.

Additional

Information (cont.)

- restructure: the Responsible Entity has the power

to do all things necessary to give effect to a

restructure proposal, including compulsorily

acquiring or transferring Units for consideration

including securities, if the restructure proposal has

been approved by a Special Resolution of

unitholders;

- miscellaneous: the Responsible Entity is entitled

to: act upon advice given by professionals; value

the assets of the Trust at any time; hold Units in

any capacity; deal with itself or have an interest in

a contract or transaction; and retire as responsible

entity; and

- liability: the Responsible Entity is not liable in

contract, tort or otherwise for any loss suffered by

unitholders except as imposed by the

Corporations Act. The Responsible Entity is

entitled to be indemnified out of the Trust's assets

for any liability it incurs in properly performing its

duties or exercising any of its powers in relation to

the Trust.

The Constitution provides that the Trust will terminate

on the earliest of: the date specified as the

termination date by the Responsible Entity in a notice

to unitholders; the date proposed by the Responsible

Entity and approved by a Special Resolution of

unitholders; or the date on which the Trust terminates

according to the Constitution or by law.

The Responsible Entity must convene a meeting of

unitholders prior to the eighth anniversary of the date

of commencement of the Trust to consider a

resolution to terminate the Trust.

Subject to the Corporations Act, the Constitution may

be amended by the Responsible Entity or a resolution

of unitholders.

15.2 Constitution of MPT

MPT is not yet a registered managed investment

scheme, but it is intended to be registered prior to

Lease Commencement. The responsible entity of

MPT is Stockland Trust Management Limited. The

main rules governing the operation of MPT are set out

in its constitution.

The main provisions of the constitution for MPT are

essentially the same as the main provisions of the

constitution for the Trust (described in Section 15.1),

except in relation to:

- fees of MPT which are disclosed in Section 9.2.7;

- termination of MPT as:

- a termination date proposed by the responsible

entity of MPT does not need to be approved

by a special resolution of unitholders of MPT;

and

- there is no provision requiring a meeting after

a period to permit the unitholders in MPT to

vote on the winding up of MPT;

- the quorum at MPT unitholder meetings, which is

two members holding 25% of the Ordinary Units

in MPT; and

- borrowing, as after Lease Commencement, the

responsible entity of MPT can only borrow money

or charge or encumber assets for the purpose of:

- paying any tax payable on or in relation to the

Property or Optus Lease;

- paying the acquisition price on the part of the

Property known as Paul Street North (refer to

Section 5.6); or

- for such other purpose as it may consider

necessary or desirable provided that the

aggregate of these additional borrowings does

not exceed $10 million.

15.3 MPT Investors’ Deed

On Lease Commencement, Stockland Trust intends to

reduce its interest in MPT to a minimum of 31% by

facilitating the issue of ordinary units in MPT to the

Trust (49%) and a Wholesale Investor (20%).

Stockland is currently negotiating with a Wholesale

Investor on price and terms similar to that offered to

the Trust. Any proposed acquisition of ordinary units in

MPT by Wholesale Investor(s) prior to Lease

Commencement will be made at price and terms

similar to that provided to the Trust.

The proposed MPT Investors’ Deed sets out the

obligations of Stockland Trust, the Wholesale Investor

and the Trust in respect of their investment in MPT.

Under the proposed MPT Investors’ Deed, the parties

intend to agree as follows:

- Stockland Trust will subscribe for 15,640,705

ordinary units in MPT and additional units to fund

its share of the establishment costs of MPT and

the costs of acquiring the Property at $1.00 per

ordinary unit;


83

- the Wholesale Investor and the Trust will subscribe

for 10,090,777 and 24,722,404 Series A and

Series B MPT Notes respectively and additional

MPT Notes to acquire their share of the

establishment costs of MPT and the costs of

acquiring the Property, all at $1.00 per note on

Final Allocation;

- until Lease Commencement, the Series A MPT

Notes will require interest be paid on their face

value at the rate of 5.75% per annum. The Series

B MPT Notes will require interest be paid on their

face value at the rate of 8.23% per annum. The

Series A and Series B MPT Notes will be

unsecured;

- on Lease Commencement and provided that the

conditions precedent are satisfied, the Wholesale

Investor and the Trust will subscribe for such

number of ordinary units in MPT as the number of

MPT Notes they hold, with the consideration to be

given by way of promissory note;

- MPT will deliver to the Wholesale Investor and the

Trust the promissory notes received as

consideration for the ordinary units in MPT for

which they subscribe on Lease Commencement,

in satisfaction of the principal amount on all of the

MPT Notes, and the MPT Notes will thereby be

extinguished;

- on Lease Commencement provided the conditions

precedent are satisfied, Stockland Trust, the

Wholesale Investor and the Trust will subscribe for

300,653,914 additional ordinary units in MPT so

that they each hold the following proportions of

ordinary units in MPT:

Stockland Trust 31%

Wholesale Investor 20%

Trust 49%

- if Lease Commencement does not occur before 1

July 2008 (which date may be accelerated by

Stockland Development advising MPT that Lease

Commencement cannot be achieved by 1 July

2008 or delayed by unanimous approval of MPT

unitholders) or if the conditions precedent to

Lease Commencement are not satisfied, MPT will

repay the principal amount on all of the MPT

Notes and the holders of the MPT Notes will not

be required to subscribe for ordinary units in MPT.

In this instance, Stockland Trust has agreed to

guarantee to MPT payment of such an amount of

money (either through subscription for ordinary

units in MPT or by a loan) as is required by it to

enable it to repay the principal amount on all of

the MPT Notes;

- pre-emptive rights exist between the unitholders

in MPT in the event that a unitholder in MPT

wishes to sell or defaults under the deed, which

are described in Section 3.5;

- a special committee, comprising a representative

of each unitholder in MPT, will be formed to,

amongst other things:

- review, consider, decide and give directions to

MPT on all proposals and recommendations

from MPT which relate to the acquisition,

disposal, management or development of assets

of the Trust, and strategic matters affecting the

Property and any other assets of MPT;

- monitor the leasing program and capital

expenditure program;

- review breaches by the Property manager of

the terms of its agreement with MPT and to

review any decision to terminate the Property

manager; and

- review, consider, decide and give directions to

the responsible entity of MPT in relation to any

decision concerning the Optus Lease which is

likely to have a material effect on the value of

the Property of greater than $1,000,000.

- Whilst there are three unitholders in MPT, a

resolution of the special committee will be passed

by a majority vote on a show of hands. A poll

cannot be demanded. If there are more than

three unitholders, then a resolution of the special

committee will be passed by a majority vote on a

poll; and

- the Unitholders will not exercise any rights under

the law or the constitution of MPT nor take any

action to, amongst other things:

- sell the Property;

- terminate the Optus Lease; or

- bring about the termination or the winding up

of MPT,

unless consistent with the rights under the

Agreement for Lease and unanimously approved in

writing by the unitholders of MPT.


84

15.

Additional

Information (cont.)

15.4 Underwriting Agreement

SMFL has entered into the Underwriting Agreement

with Westpac and STML as responsible entity of

Stockland Trust as Underwriters of the Offer. Under

the terms of the Underwriting Agreement, the

Underwriters guarantee to SFML that they will

subscribe for any of the 85,867,000 Units that are not

applied for by Investors. The obligations of the

Underwriters are several in that:

- Westpac has agreed to underwrite 85% of the

Units the subject of the Offer; and

- STML as responsible entity of Stockland Trust has

agreed to underwrite the remaining 15% of the

Units the subject of the Offer.

SFML must pay a fee to the Underwriters which

SFML will pay from the establishment fee payable to

SFML by the Trust on Final Allocation (refer to Section

9.1).

SFML must accept all valid Applications provided that

the acceptance of the Applications does not cause

SFML to breach the Constitution.

An Underwriter may terminate its obligations under

the Underwriting Agreement if any of the following

events occur:

- an insolvency event occurs in respect of SFML or

the Trust;

- a condition precedent to the underwriting is not

satisfied, including completion of due diligence

procedures, execution of transaction documents

or debt drawdown;

- the PDS content is or becomes misleading or

deceptive, there is an omission from the PDS,

certain persons withdraw their consent to be

named in the PDS, or ASIC takes regulatory action

in relation to the PDS;

- a PDS in-use notice is not lodged with ASIC by the

required time;

- without the prior consent of the Underwriters, with

such consent not to be unreasonably withheld, the

agreed timetable for the Offer is delayed by more

than five Business Days, the capital structure of

SFML or the Trust is altered, or the constitution of

SFML or the Trust is amended; or

- there is a material adverse change in the financial

position of SFML or the Trust, or a new law or

policy results in, or could reasonably be expected

to result in, a material adverse change to the

Offer, the PDS or the income tax position of the

Trust.

An Underwriter may terminate its obligations under

the Underwriting Agreement if any of the following

events occur and the Underwriter forms the

reasonable opinion that the event will have a material

adverse effect on the success of the Offer:

- SFML fails to perform its obligations under a

transaction document (as defined in the

agreement), or comply with a clause of its

constitution or the Trust's constitution, the law or

ASIC policy, or an event of default occurs under a

finance document (as defined in the agreement);

- SFML makes a false or misleading statement, or

there is any material omission from, the PDS or

SFML otherwise comes under an obligation to

issue a supplementary or replacement PDS;

- SFML charges or agrees to charge the whole or a

substantial part of the assets of SFML or the Trust

other than as disclosed in the PDS;

- the 90-day dealer's bill rate reaches a level which

is 100 basis points more than the rate at the close

of trading on the Business Day immediately

before the date of execution of the Underwriting

Agreement;

- there is an outbreak or major escalation of

hostilities, anti-government terrorist activities or a

national emergency declared in Australia, the

United Kingdom, the United States of America or

certain other countries;

- there is a general moratorium or material

disruption in commercial banking or security

settlement or clearance services in Australia, the

United States of America or the United Kingdom,

or trading in all securities quoted or listed on the

Australian Stock Exchange, the London Stock

Exchange or the New York Stock Exchange is

suspended or limited such that it becomes, in the

reasonable opinion of the Underwriter,

impracticable to market the Offer or to enforce

contracts to issue and allot or sell the

underwritten Units;


85

- a representation, warranty or statement by SFML to the Underwriters is or becomes materially untrue or

misleading, or there is a material omission from any information, announcement, advertisement or publicity

in relation to the PDS or the Offer; or

- the forecasts in the PDS are or become incapable of being met or, in the reasonable opinion of the

Underwriter, are unlikely to be met in the forecast time.

If an Underwriter terminates its obligations, the Offer will not proceed and Application Monies will be returned

to Applicants as soon as practicable.

15.5 Other details of the Trust

Information available to Investors

The Responsible Entity will endeavour to provide Investors with the following information:

Type of information

Newsletter on the performance of the Trust

Distribution statement

Annual financial report of the Trust

Annual taxation statement

When and how available

Every six months, mailed with the distribution

statements for the half years ending 30 June and

31 December (also available on the internet at

www.stockland.com.au/unlistedpropertyfunds)

Quarterly, mailed within two months of 31 March,

30 June, 30 September and 31 December each year

30 September each year by mail (also available on the

internet at www.stockland.com.au/unlistedpropertyfunds)

By 30 September each year by mail

The Trust is likely to be a "disclosing entity", and will be subject to regular reporting and disclosure obligations

under the Corporations Act. Copies of documents that are lodged with ASIC to meet these requirements may

be obtained from, or inspected at, an ASIC office. If requested, the Responsible Entity must provide Investors

with a copy of any annual or half yearly reports lodged with ASIC. The Responsible Entity does not expect that

any such reports or notices will be lodged during the time the Offer is open.

Compliance Committee

The Responsible Entity has established a Compliance Committee and the members are detailed in Section 7.3.

The functions of the Compliance Committee include monitoring compliance with the Compliance Plan,

reporting breaches of the Corporations Act or certain provisions of the Constitution to the Responsible Entity or

ASIC, and reviewing and reporting on the adequacy of the Compliance Plan from time to time.

Auditor

The Responsible Entity has appointed KPMG as the auditor of the Trust and of the Compliance Plan. The audit

partner of KPMG appointed as the audit partner of the Trust is different to the audit partner of KPMG appointed

as the Compliance Plan auditor.

Custodian

Trust Company of Australia Limited has been appointed as custodian of the Trust and MPT.

Registrar

Computershare Investor Services Pty Limited has been appointed as the registrar of the Trust.


86

15.

Additional

Information (cont.)

Compliments and complaints

If Investors are satisfied with the services of the

Responsible Entity or have a complaint, they may

write to Stockland Funds Management Limited at the

address shown on the inside back cover of this PDS.

Investors’ complaints will be acknowledged within 14

days of receipt, and investigated with a view to

reporting back to the Investor within 45 days. The

Responsible Entity will attempt to resolve all

complaints within 21 days. The Constitution provides a

framework governing how complaints must be dealt

with. Where a complaint remains unresolved, the

Investor may be entitled to take their complaint to the

Responsible Entity’s external complaints scheme,

Financial Industry Complaints Service (FICS). FICS is

an independent external complaint handling body

approved for this purpose by ASIC. Where an Investor

has referred a complaint to FICS, the complaints

officer shall comply with the procedures set out in the

terms of reference of FICS. Once referred and once

relevant time periods to settle the complaint have

expired, FICS will work with the Investor and the

Responsible Entity to seek a mutually acceptable

resolution of the complaint. To contact FICS, Investors

should telephone 1300 780 808 or write to PO Box

579, Collins Street West, Melbourne VIC 8007.

15.6 Additional information in relation to

the Offer

Process of allocation of Units

Pending the allocation of Units, Application Monies

will be held in an account that complies with section

1017E of the Corporations Act. Units will be allocated

at the discretion of the Responsible Entity. Final

Allocation is anticipated to occur on 27 September

2005 following the close of the Offer. Units may be

allocated progressively during the Offer period so as

to ensure that allocation of Units is no later than one

month from receiving the Application Monies.

Applications will be batched and allocated in a manner

that satisfies any requirement for stamp duty

purposes for a spread of public Investors. If it is not

possible to allocate a Unit within one month from the

date of receipt of the Application Monies, the Units

will be batched and allocated as soon as practicable

after the end of the one month period to ensure that

any requirement for a sufficient spread of Investors is

satisfied.

Foreign persons

An Applicant will need to confirm on the Application

Form whether or not they are a "foreign person", the

meaning of which is set out in the Foreign Acquisitions

and Takeovers Act 1975 (Cth). If the Applicant is a

foreign person, it may mean their Application will be

rejected. This will depend on the total number of

Applications by foreign persons which in total must be

below 40% of the Units, or for an individual, less than

15% of the Units issued by the Trust.

Privacy

Current privacy legislation provides individuals with

increased levels of protection relating to the collection

and use of their personal information.

By signing the Application Form, each Applicant

agrees to the following:

- the Responsible Entity and third parties such as

investment advisers and brokers (Parties) may

exchange with each other any information about

the Applicant including:

- any information provided by the Applicant in

the Application Form (including your TFN);

- any other personal information provided by the

Applicant to any of the Parties or which they

otherwise lawfully obtain about the Applicant;

and

- any transaction details or transaction history

arising out of the Applicant's arrangements

with any of the Parties;

- if the Responsible Entity engages anyone (Service

Provider) to do something on its behalf (for

example, a mail house or data processor), then

the Applicant agrees that the Responsible Entity

and the Service Provider may exchange with each

other any information referred to above;

- the Responsible Entity might give any information

referred to above to entities other than the Parties

and the Service Providers where it is required or

allowed by law or where the Applicant has

otherwise consented;


87

- any information referred to above can be used by

the Parties and any Service Provider for

establishing or updating that Applicant's

investment in the Trust, and for the administration

of that Applicant's investment, planning, product

development, research purposes, and statistical

analysis; and

- the Responsible Entity may contact each Applicant

in relation to other investment products offered by

the Responsible Entity, unless each Applicant

elects to not receive such information by ticking

the relevant box on the Application Form or

contacting the Responsible Entity by telephone on

1300 652 748.

Each Applicant can access their personal information

that the Responsible Entity holds about them.

Sometimes there is a reason why that is not possible,

in which case the Applicant will be told why. If an

Applicant would like to find out what sort of personal

information the Responsible Entity has about them, or

wishes to make a request for access, they can

contact the Responsible Entity by telephone on

1300 652 748.

If an Applicant fails to provide any information

requested in the Application Form, or does not agree

to any of the possible exchanges or uses detailed

above, their Application may not be accepted by the

Responsible Entity.

The Responsible Entity will also provide a copy of any

annual or half-yearly reports free of charge to any

person who requests a copy prior to the close of the

Offer.

15.7 Other material contracts and

agreements

The Responsible Entity has entered into or adopted a

number of agreements on behalf of the Trust. A

summary of each of the material contracts and

agreements is provided below.

The documents are broadly divided into three

categories:

- agreements applicable to all unitholders in

Macquarie Park Trust;

- agreements specific to Macquarie Park Trust; and

- agreements specific to the Trust.

Agreements applicable to all unitholders in Macquarie Park Trust

Name of document Parties Summary of purpose

of document

MPT Investors' Deed (proposed)

- Stockland Trust Management

Limited as responsible entity

for Macquarie Park Trust

- Stockland Trust Management

Limited as trustee for

Stockland Trust

- Wholesale Investor

- Stockland Funds Management

Limited as responsible entity

for Stockland Direct Office

Trust No. 2

Sets out the obligations of the

unitholders in respect of their

investment in MPT and regulates

the loan provided by the

Wholesale Investor and the Trust

to MPT. Further information is

provided in Section 15.3. It also

provides for the guarantee

described in Section 7.7.2.


88

15.

Additional

Information (cont.)

Agreements specific to Macquarie Park Trust

Name of document Parties Summary of purpose

of document

Loan Agreement

Turn-Key Development Deed

Offer for Lease

- Stockland Trust Management

Limited as trustee for

Stockland Trust as lender

- Stockland Trust Management

Limited as trustee for

Macquarie Park Trust as

borrower

- Stockland Development Pty

Limited as guarantor

- Stockland Trust Management

Limited as trustee for

Macquarie Park Trust as

beneficiary

- Trust Company of Australia

Limited as custodian for

Stockland Trust Management

Limited as trustee for

Macquarie Park Trust as lessor

- Stockland Development Pty

Limited as lessee

Provides bridge financing for the

borrower to purchase the

Property from PTA (interest free

loan) and the Paul Street North

property (interest rate of 6.25%

per annum) until Lease

Commencement.

Provides a mechanism for

payment of the development and

the provision of certain

guarantees. The obligations of

Stockland Development and the

consideration for the Property are

detailed in Section 5.4. Stockland

Development will also fund the

GST on the consideration at

6.40% per annum. The

guarantees are summarised in

Section 7.7.1.

Provides access to the Property

for Stockland Development to

enable it to develop the Property.

Stockland Development will pay

rental in consideration for access

as detailed in Section 6.1.

Compliance Plan

Novation Deed

- Stockland Trust Management

Limited as Responsible Entity

for Macquarie Park Trust

- Stockland Trust Management

Limited as responsible entity

for Property Trust of

Australasia

- Stockland Trust Management

Limited as responsible entity

for Macquarie Park Trust

Specifies how STML will monitor:

- its obligations as a responsible

entity of a managed

investment scheme and under

the MPT Constitution and the

Corporations Act; and

- the terms of its Australian

Financial Services Licence.

Novates the Agreement for Lease

from PTA to MPT.


89

Name of document Parties Summary of purpose

of document

16 Giffnock Ave Agreement

Property Management

Agreement

Custody Deed

- Optus Administration Pty

Limited as lessee

- Stockland Trust Management

Limited as trustee for

Property Trust of Australasia

as owner of 16 Giffnock

Avenue

- Stockland Property

Management Pty Limited

(SPM)

- Stockland Trust Management

Limited as responsible entity

for Macquarie Park Trust

- Trust Company of Australia

Limited (TCAL)

- Stockland Trust Management

Limited as responsible entity

of Macquarie Park Trust

Continues the obligations of the

owner under the Agreement for

Lease once the Agreement for

Lease is novated to ensure that

the lessee will continue to have a

first right of refusal to lease the

property known as 16 Giffnock

Avenue.

Provides for SPM to undertake

the services of property manager

on behalf of MPT for 0.5% of the

aggregate of rent and outgoings

plus approximately $200,000 per

annum for building supervision

salaries and services, which are

both fully recoverable outgoings

from Optus under the Optus

Lease.

Provides for TCAL to undertake

custodian services in relation to

the Property on behalf of STML.


90

15.

Additional

Information (cont.)

Agreements specific to the Trust

Agreements specific to Stockland Direct Office Trust

No 2 (Trust)

Name of document Parties Summary of purpose

U

of document

Compliance Plan

- Stockland Funds Management

Limited as responsible entity

for Stockland Direct Office

Trust No. 2

Specifies how SFML will monitor:

- its obligations as a

responsible entity of a

managed investment scheme

and under the Constitution

and the Corporations Act; and

- the terms of its Australian

Financial Services Licence.

Registry Agreement

Deed of Indemnity

Underwriting Agreement

Distribution Agreement

- Stockland Funds Management

Limited as responsible entity

for Stockland Direct Office

Trust No. 2

- Computershare Investor

Services Pty Limited

- Stockland Corporation Limited

as guarantor

- Stockland Funds Management

Limited as responsible entity

for Stockland Direct Office

Trust No. 2 as beneficiary

- Stockland Funds Management

Limited

- Westpac Banking Corporation

- Stockland Trust Management

Limited as responsible entity

of Stockland Trust

- Stockland Funds Management

Limited

- Westpac Banking Corporation

Provides for the provision of

registry services by

Computershare to the Trust in

relation to the Instalment

Receipts.

This indemnity ensures that, in

the event that the Optus Lease

does not commence by 1 July

2008 or such longer period as

approved by Investors by Special

Resolution, the Trust will have

sufficient funds so that Investors

will receive a refund of their

Application Monies. Further

details are provided in Section

7.7.3.

Provides for Westpac to

underwrite 85% of the Units the

subject of the Offer and for

Stockland Trust to underwrite the

remaining 15%. Further

information is provided in

Section 15.4.

Provides for Westpac to distribute

85% of the Units the subject of

the Offer.


91

Name of document Parties Summary of purpose

of document

Limited Liquidity Facility

Security Trust Deed

Custody Deed

Bank Loan Facility (subject to

documentation)

- Stockland Funds Management

Limited

- Stockland Trust Management

Limited

- Westpac Banking Corporation

- Stockland Funds Management

Limited

- Stockland Funds Management

Limited as responsible entity

for Stockland Direct Office

Trust No. 2

- Permanent Trustee Company

Limited as Security Trustee

- Trust Company of Australia

Limited (TCAL)

- Stockland Funds Management

Limited as responsible entity

of Stockland Direct Office

Trust No. 2

- Stockland Funds Management

Limited

- Westpac Banking Corporation

(Financier)

Confirms the basis upon which

Westpac will provide a facility

from Lease Commencement

whereby Investors can apply to

sell their Instalment Receipts for

a prescribed price and processing

fee, subject to a number of terms

and conditions detailed in Section

3.7.

Provides for the Security Trustee

to hold Units on trust for

Investors pending payment of the

Final Instalment. It also regulates

the mechanics of the Instalment

Receipts as detailed in Section 4

and provides for the possibility of

Westpac becoming the Security

Interest Holder.

Provides for TCAL to undertake

custodian services in relation to

the Property held on trust by

SFML as trustee of the Trust.

Provides for the advance of the

Bank Loan to the Trust on the

parameters detailed in Section

3.2. The offer to the Trust of the

Bank Loan contains a number of

conditions including events of

default and review events which

if breached, may result in the

Financier enforcing its security

against the Trust and selling the

Trust's Property Interest. The

financial covenants relating to the

Bank Loan are detailed in Section

10.3. If these covenants are

breached, the Financier and the

responsible entity have 20 days

to agree a resolution of the

matter before the Financier may

enforce its security.


92

15.

Additional

Information (cont.)

ASIC exemptions and modifications

ASIC has provided the following exemptions and

modifications:

- an exemption relieving SFML, the Security Trustee

and Westpac from holding an Australian financial

services licence for dealing in, and providing

financial product advice in relation to, the

Instalment Receipts;

- a declaration that a person who holds an

Australian financial services licence that authorises

that person to deal in, or provide financial product

advice in relation to, interests in managed

investment schemes may deal in, or provide

financial product advice in relation to, the

Instalment Receipts;

- an exemption relieving SFML from preparing and

giving a product disclosure statement to Investors

upon the issue of new Units following the

payment of the Final Instalment;

- a modification of section 761E of the Corporations

Act such that the Responsible Entity is taken to be

the issuer of the Instalment Receipts;

- a modification of Part 5C.6 and section

601GA(4)(b) of the Corporations Act to enable the

Responsible Entity to redeem the initial units,

which are issued to establish the Trust,

immediately after the Units are issued to the

Security Trustee;

- a modification of Part 5C.6 and section

601GA(4)(b) of the Corporations Act to enable the

Responsible Entity, following the payment of the

Final Instalment, to redeem all Units and issue the

same number of new Units; and

- a modification of section 601GA of the

Corporations Act such that the Constitution is not

required to make adequate provision for the

calculation of transaction costs, provided that the

basis for charging such costs is disclosed in this

PDS.

15.8 Consents and disclaimers

Westpac's consent

Westpac Banking Corporation has given, and has not

withdrawn, its consent to the inclusion in this PDS of

the references to Westpac in its capacity as

Underwriter, Financier, Limited Liquidity Facility

provider and possibly becoming the Security Interest

Holder. Westpac has not authorised or caused the

issue of this PDS and does not make, or purport to

make, any statement in this PDS other than as noted

above.

Expert consents

The following organisations have given, and have not

withdrawn, their written consent to the inclusion in

this PDS, in the form and context in which they are

included, of statements made by or attributed to

them as listed in the table below, and to be named in

this PDS in the stated capacity. Each of these

organisations, to the maximum extent permitted by

law, expressly disclaims and takes no responsibility

for any statements or omissions in this PDS, other

than the reference to its name and a statement or

report included in this PDS with the consent of that

organisation as specified below:

Organisation Capacity Statements

Jones Lang LaSalle (NSW)

Pty Limited

Deloitte Corporate Finance Pty

Limited

Deloitte Touche Tohmatsu Ltd

Independent valuer

Independent accountant

Taxation adviser

Valuation Report in Section 11

Independent Accountant's Report

in Section 12 that relates to the

Financial Information in Section 8

Taxation Report in Section 13

Mallesons Stephen Jaques

Legal adviser

Legal Report for Superannuation

Investors in Section 14


93

Security Trustee’s Consent

None of Permanent Trustee Company Limited

ACN 000 000 993 or any of its related parties or

associates makes any representations nor gives any

guarantees or assurances as to the performance of

the Trust, payments under the Units or any particular

overall rate of return.

Permanent Trustee Company Limited does not make,

or purport to make, any statement that is included in

this PDS and there is no statement in this PDS which

is based on any statement by Permanent Trustee

Company Limited. Accompanying this PDS is a

Financial Services Guide ("FSG") for Permanent

Trustee Company Limited in relation to its role as

Security Trustee. This PDS should be read in

conjunction with that FSG. To the maximum extent

permitted by law, Permanent Trustee Company

Limited expressly disclaims and takes no

responsibility for any part of this PDS other than the

references to its name in its capacity as Security

Trustee.

Directors' consent

The directors of the Responsible Entity have each

consented to the issue of this PDS.

Other consents

Stockland Trust Management Limited, Stockland

Corporation Limited, Stockland Development Pty

Limited, Stockland Property Management Pty Limited,

KPMG, Mallesons Stephen Jaques, Trust Company of

Australia Limited, Permanent Trustee Company

Limited, Rice Daubney and Computershare Investor

Services Pty Limited have given, and have not

withdrawn, their written consent to be named in this

PDS in the capacity in which they are named. They

have not authorised or caused the issue of this PDS

and do not make, or purport to make, any statement

in this PDS.

15.9 Disclosure of experts’ interests

No expert, nor any firm in which an expert is a

partner, has an interest that exists at the date of this

PDS, or that existed within two years before that

date, in the promotion or formation of the Trust.

No amount has been paid or agreed to be paid to an

expert in the last two years for services rendered by

that expert or any firm of which the expert is a partner

in connection with the promotion or formation of the

Trust, other than interests or amounts disclosed in

this PDS and the following table:

Organisation Role Amount of fee

(excluding GST)

Deloitte Corporate Independent accountant $70,000

Finance Pty Limited

Deloitte Touche Tohmatsu Ltd Taxation adviser $30,000

Jones Lang LaSalle (NSW) Independent valuer $35,000

Pty Limited

Mallesons Stephen Jaques Legal adviser $175,000

15.10 Standard & Poor’s ratings

Ratings are statements of opinion, not statements of

fact or recommendations to buy, hold or sell any

securities. Ratings may be changed, withdrawn or

suspended at any time. In Australia, credit ratings are

assigned by Standard & Poor's (Australia) Pty Limited,

which does not hold an Australian financial services

licence under the Corporations Act.


94

16.

Glossary

Term

A-GAAP

A-IFRS

After Tax Return

Agreement for Lease

Applicant

Application

Application Form

Application Monies

Meaning

Australian Generally Accepted Accounting Principles (as in force as at

31 December 2004).

Australian equivalents to International Financial Reporting Standards.

The return for an individual Investor subject to the top marginal rate of

income tax of 48.5%, after payment of income tax or the receipt of an

income tax refund, as applicable, assuming the taxation affairs of the

Investor solely involved an investment in Units. It ignores the potential

effect of future capital gains tax implications that may arise on the

disposal of Instalment Receipts or Units as detailed in Section 13.

The agreement for lease in respect of the Property between Stockland

Trust Management Limited, Trust Company of Australia Limited, Optus

and SingTel Optus Pty Limited dated 1 September 2004 which will be

novated to MPT.

A person who applies to acquire Units by completing and submitting an

Application Form and paying the First Instalment.

Completion and submission of an Application Form in accordance with

instructions in this PDS.

The Application Form which is included at the back of or accompanying

this PDS.

The amount included as part of an Applicant’s Application, being equal

to the First Instalment.

Application Price The purchase price of a Unit, being $1.00.

APRA

ASIC

ATO

Bank Loan

Australian Prudential Regulation Authority.

Australian Securities and Investments Commission.

Australian Taxation Office.

The loan provided by the Financier to the Trust to assist funding:

- the loan to MPT and, on Lease Commencement, the acquisition of

Ordinary Units in MPT (Term Loan Facility);

- the Trust’s share of capital expenditure relating to the Property

(Capital Expenditure Facility); and

- an overdraft facility for cash flow management (Overdraft Facility).

Baulderstone Hornibrook Baulderstone Hornibrook Pty Limited ABN 56 002 625 130.

Buildings

Business Day

Capital Expenditure Facility

Six campus-style office buildings comprising a net lettable area of

approximately 84,000 sqm (subject to survey) which are currently being

developed on the Property.

Monday to Friday inclusive, except New Year’s Day, Good Friday, Easter

Monday, Christmas Day, Boxing Day and any other declared public

holiday in New South Wales.

The $3.0 million loan provided by the Financier to the Trust to fund the

Trust’s share of capital expenditure.


95

Term

CBD

CGT

Change of Control

Closing Date

Compliance Committee

Compliance Plan

Constitution

Corporations Act

CPI

Deloitte

Effective Date

Meaning

Central Business District.

Capital gains tax.

Any person together with that person’s associates becoming entitled to

20% or more of the total number of Instalment Receipts on issue.

The date the Offer closes, scheduled for 16 September 2005. The

Responsible Entity has the right to close the Offer early or extend the

Offer without prior notice.

A sub-committee of the board of the Responsible Entity. The functions

of the Compliance Committee are to monitor compliance by the

Responsible Entity with the Compliance Plan, Constitution and

Corporations Act.

A plan which sets out the measures that the Responsible Entity will

apply in operating the Trust to ensure compliance with matters as

required by the Corporations Act and Constitution.

The Trust’s constitution dated 13 May 2005 (as amended from time to

time).

Corporations Act 2001 (Cth).

The Consumer Price Index (All Groups) published by the Australian

Bureau of Statistics.

Deloitte Touche Tohmatsu Ltd.

The date with effect from which Westpac or its nominee (which must

be a wholly owned subsidiary, either direct or indirect, of Westpac)

becomes entitled and subject to the rights and obligations attached to

the role of the Security Interest Holder.

Final Allocation The final allocation of Units (expected to be on 27 September 2005

unless varied by the Responsible Entity) after close of the Offer. Units

may be allocated progressively.

Final Distribution per Unit

Final Instalment

The amount per Unit that would be paid to an Investor calculated in

accordance with the Constitution as if the Trust were wound up on the

date of the calculation.

$0.60 per Unit payable to the Security Interest Holder on the Final

Instalment Payment Date. Further details are provided in Section 4.

Final Instalment Payment Date The date on which the Final Instalment is to be paid, expected to be 30

June 2013, but which may be varied as detailed in Sections 4.4 and 4.5.

Financial Forecasts

Financial Information

The financial forecasts include the pro-forma and forecast statements

of financial performance and statements of distribution of the Trust for

the Forecast Period.

Forecast financial information for the Trust including the Financial

Forecasts and the pro-forma Statements of Financial Position and

sources and applications of funds.


96

16.

Glossary (cont.)

Term

Financier

First Instalment

Meaning

Westpac as lender of the Bank Loan.

$0.40 per Unit payable on Application, being 40% of the Application

Price.

Forecast Period The period from the date of Final Allocation to 30 June 2009.

Gearing Ratio

In respect of the Trust, the ratio of the principal outstanding under the

Bank Loan to the value of the Trust's Property Interest.

In respect of an Investor, the ratio of the aggregate of principal

outstanding under the Bank Loan and the Final Instalment to the value

of the Trust's Property Interest.

GST As defined in the A New Tax System (Goods and Services Tax) Act 1999

(Cth) (as amended).

Guarantor of the Optus Lease SingTel Optus Pty Limited ACN 052 833 208.

Instalment Receipts

Interest and Fees

Investor

Lease Commencement

Limited Liquidity Facility

Receipts issued by SFML to Investors recognising Investors' beneficial

interest in Units and their obligation to pay both Interest and Fees on

the Final Instalment until the Final Instalment Payment Date and the

Final Instalment when they fall due. Further details are provided in

Section 4.

Any interest expense, establishment fee or line fee relating to the Final

Instalment as detailed in Section 4.6.

An investor in the Trust who will be or is registered as the holder of

Instalment Receipts if an Application under this PDS is successful.

The date the Optus Lease commences, which is scheduled to be 1 July

2007 and each of the following conditions precedent have been

satisfied:

- the Buildings are practically complete;

- the Property is owned by STML as responsible entity of MPT and is

free of any mortgage;

- Stockland Development has received from the responsible entity of

MPT an amount equal to the GST on the consideration payable by

MPT as described in Section 5.4;

- there have been no ordinary units issued by the responsible entity

of MPT within the period of 13 months from the date the Trust

provides the loan to MPT; and

- the New South Wales Office of State Revenue registers MPT as an

"imminent wholesale unit trust" under the Duties Act 1997 (NSW).

A facility provided by Westpac that provides all Investors with the

opportunity to apply to sell a limited number of Instalment Receipts on

and after Lease Commencement. This facility is subject to a number of

conditions outlined in Section 3.7 and may be terminated at any time.

MPT Macquarie Park Trust ABN 97 139 887 589.

Net Sales Proceeds

The gross sale proceeds of the Trust's Property Interest less agent

commissions and GST.


97

Term

Net Tangible Assets or NTA

NTA per Unit

Offer

Meaning

The Net Tangible Assets is calculated as:

- the gross assets of the trust excluding any intangible assets;

- less liabilities of the trust (excluding liabilities to unitholders);

- plus other A-IFRS adjustments as considered necessary by the

responsible entity to bring to account in order that the Net Tangible

Assets for the particular calculation period may fairly represent the

net tangible assets of the trust for that period.

The NTA divided by the number of Units on issue.

The offer of Units for purchase pursuant to this PDS.

Opening Date The date the Offer opens being 27 July 2005.

Optus Optus Administration Pty Limited ACN 055 136 804.

Optus Lease

Ordinary Units in MPT

Overdraft Facility

PDS

The aggregate of the three leases to be entered into by Optus and MPT

as described in Section 6.

Units in MPT to be issued to the Trust at Lease Commencement.

The $1.0 million loan provided by the Financier to the Trust to assist

with cash flow management.

This Product Disclosure Statement.

PTA Property Trust of Australasia ABN 92 090 858 429.

Property The land and improvements known as Optus at Macquarie Park, 1-5

Lyon Park Road, Macquarie Park, New South Wales 2113 being the land

comprised in Certificates of Title Auto Consol 13254-18, Folio Identifiers

51/564301, 52/564301, 2/880284, 2/655022 and C1/377649.

Quarter

A three month period ending on 31 March, 30 June, 30 September and

31 December.

Registrar Computershare Investor Services Pty Limited ABN 48 078 279 277.

Responsible Entity

Security Interest

Security Interest Holder

Security Trust Deed

Stockland Funds Management Limited ABN 86 078 081 722, AFS

Licence Number 241188, as responsible entity of the Trust.

The security interest of the Security Interest Holder as unpaid seller

over the Units to secure the payment of the Final Instalment and

Interest and Fees thereon as referred to in the Security Trust Deed.

SFML, and following the Effective Date, Westpac (or a wholly owned

subsidiary, whether direct or indirect, of Westpac nominated by

Westpac).

The agreement between SFML and the Security Trustee which is

detailed in Section 4.

Security Trustee Permanent Trustee Company Limited ACN 000 000 993.

SFML Stockland Funds Management Limited ABN 86 078 081 722.

SIS

SMSFs

Superannuation Industry (Supervision) Act 1993 (Cth) and Regulations.

Self managed superannuation funds.


98

16.

Glossary (cont.)

Term

Special Resolution

sqm

Meaning

A resolution of Investors at a meeting that requires approval by at least

75% of the votes cast by Investors present (whether in person, by

representative or by proxy) and entitled to vote.

Square metres.

STML Stockland Trust Management Limited ABN 86 001 900 741.

Stockland

Stockland Corporation and Stockland Trust.

Stockland Corporation Stockland Corporation Limited ABN 43 000 181 733.

Stockland Development Stockland Development Pty Limited ABN 71 000 064 835.

Stockland Securities

Stockland Trust

Structural Works

Term Loan Facility

TFN

Stockland Securities are a stapled security listed on the Australian Stock

Exchange, being an ordinary unit in Stockland Trust and an ordinary

share in Stockland Corporation stapled together.

Stockland Trust ARSN 092 897 348 and, as the context requires, its

controlled entities.

Maintenance, repair and replacement work to the roof, external walls or

structure of the Buildings, replacement of an entire item of plant or

equipment for the services, and refurbishment or replacement of entire

items of the finishes, fixtures or fittings, other than routine

maintenance and repairs including painting or similar treatment of

external surfaces.

The $103.226 million loan provided by the Financier to the Trust to

assist funding the loan from the Trust to MPT and the acquisition of

Ordinary Units in MPT.

Tax File Number.

Trust Stockland Direct Office Trust No. 2 ARSN 115 017 466,

Units in which are being offered for purchase pursuant to this PDS.

Trust's Property Interest

Turn-Key Development Deed

Underwriters

Underwriting Agreement

Unit

The Trust's 49% interest in the issued Ordinary Units in MPT to be

issued on Lease Commencement, conferring an indirect 49% interest

in the Property.

The deed between MPT, Stockland Development and Stockland Trust

which is more fully described in Section 5.4.

Westpac and Stockland Trust.

The underwriting agreement between SFML and the Underwriters.

A unit in the Trust.

Westpac Westpac Banking Corporation ABN 33 007 457 141.

Westpac Group

Wholesale Investor

Westpac and its related bodies corporate.

A wholesale investor who intends to purchase up to 20% of the

ordinary units in MPT from Stockland Trust by Lease Commencement.


Guide to the

Application Form

99

Please complete all relevant sections of the Application Form using BLOCK LETTERS. These instructions are

cross referenced to each section of the Application Form.

The securities to which this Application Form relates are Units. Further details about the Units are contained in

the PDS dated 27 July 2005 issued by the Responsible Entity. During the Offer period, paper copies of the

PDS, any supplementary form and the Application Form, will be sent free of charge on request.

The Australian Securities and Investments Commission requires that a person who provides access to an

electronic Application Form must provide access, by the same means and at the same time, to the relevant

PDS. This Application Form is included in the PDS.

The PDS contains important information about investing in the Trust. You should read the PDS before applying

for Units. Incomplete Application Forms will be deemed to be valid if the Responsible Entity believes that

sufficient information, with attached payment, has been provided. Further particulars and the correct forms of

registrable titles to use on the Application Form are contained in the table below.

A

B

C

D

E

Insert the number of Units you wish to apply for. The Application must be for a minimum of 25,000 Units

and thereafter in multiples of 1,000 Units. You may be allocated all of the Units applied for or a lesser

number.

Insert the relevant amount payable on Application. To calculate the amount payable on Application, multiply

the number of Units applied for by $0.40 per Unit. Amounts should be in Australian currency. Please make

sure the amount of your cheque(s) equals this amount.

Write the full name you wish to appear on your statement of unitholding and your residential address or the

address of your registered office if you are a company. This must be either your own name or the name of

a company. Joint Applicants may also register. You should refer to the table below for the correct forms of

registrable titles. Applications using the wrong form of title may be rejected. Individuals must also provide

their date of birth.

Please enter a postal address for all correspondence. All communications to you from the Responsible

Entity will be mailed to the person(s) and address as shown. For joint Applicants, only one address can be

entered.

Please complete the cheque details as requested in Section E of the Application Form:

- make your cheque payable to "Stockland Funds Management Limited - on A/C of "

in Australian currency and cross it "not negotiable". Your cheque must be drawn on an Australian Bank;

- the amount should agree with the amount shown in Section B;

- sufficient cleared funds should be held in your account, as a cheque returned unpaid is likely to result in

your Application being rejected; and

- pin (do not staple) your cheque to the Application Form where indicated.

F

G

Enter your Tax File Number (TFN) or exemption category. Business enterprises may alternatively quote

their Australian Business Number (ABN). Where applicable, please enter the TFN or ABN for each joint

Applicant. Collection of TFN(s) and ABN(s) is authorised by taxation laws. Quotation of TFN(s) and ABN(s)

is not compulsory. However, if these are not provided, the Responsible Entity will be required to deduct

tax at the highest marginal rate of tax (including the Medicare Levy) from distributions and the balance of

the distribution may not be sufficient to pay Interest and Fees on the Final Instalment. If this occurs, the

Security Interest Holder may direct the Security Trustee to sell the Units to which the Instalment Receipts

relate by way of enforcement of their Security Interest.

Please enter a telephone number(s), area code and an email address in case the Responsible Entity needs

to contact you in relation to your Application.


100

Guide to the

Application Form (cont.)

H

Indicate by ticking the appropriate box whether or not you are a Stockland security holder as at the date of

this PDS. You are a Stockland security holder if you own Stockland Securities.

I

An Applicant is a foreign person if one of the following applies:

- they are a natural person not ordinarily resident in Australia;

- it is a corporation in which a natural person not ordinarily resident in Australia or a foreign corporation

holds a controlling interest;

- it is a corporation in which two or more persons, each of whom is either a natural person not ordinarily

resident in Australia or a foreign corporation, hold an aggregate controlling interest;

- the trustee of a trust estate in which a natural person not ordinarily resident in Australia or a foreign

corporation holds a substantial interest; or

- the trustee of a trust estate in which two or more persons, each of whom is either a natural person not

ordinarily resident in Australia or a foreign corporation, hold an aggregate substantial interest.

If the above applies, the Applicant should answer Yes in Section I, otherwise answer No.

J

K

L

All distributions will be credited directly to your nominated account with your financial institution. Please

ensure appropriate details are inserted in Section J.

From time to time, the Responsible Entity may use your details to promote and market other Stockland

services or products which it considers to be of interest to you. Please tick the box in Section K if you do

not want this information to be sent to you.

All Applicants should read the PDS before signing and/or executing Section L. Single Applicants that are

individuals should sign the "Applicant 1 Signature" box. Where there is more than one Applicant, and they

are both individuals, the second Applicant should sign the "Joint Applicant 2 Signature" box. Applicants that

are companies should sign the appropriate director(s) boxes and stamp the “Company Seal” box (if

necessary). If an Application is being made under a power of attorney, the attorney should sign the "Power

of Attorney" box. Date this Section as at the date of the declaration which should be the same as the date

of Application.

Lodgement of Applications

Return your completed Application Form with cheque(s) attached to:

Stockland Direct Office Trust No. 2 Offer

C/- Westpac Banking Corporation

Reply Paid A990

Sydney South NSW 1234.

Application Forms must be received at the above address no later than 5.00pm (Sydney time) on 16 September

2005 unless the Offer is extended.


101

Correct forms of registrable titles

Note that only legal persons are allowed to hold Units.

Application(s) must be in the name(s) of natural person(s), companies or other legal entities acceptable to the

Responsible Entity. At least one full given name and the surname are required for each natural person. The

name of the beneficiary or any other non-registrable title may be included by way of an account designation if

completed exactly as described in the example of correct forms of registrable titles below:

Type of Investor Completion Instructions* Correct Form of

Registrable Title*

Individual and joint Use names in full, no initials Mr John Alfred Smith

Minor Use the name of the responsible John Alfred Smith

(a person under the age of 18) adult with an appropriate

designation

Companies Use company title, ABC Pty Ltd

not abbreviations

Trusts Use trustee(s) personal name(s), Mrs Sue Smith

do not use the name of the trust

Deceased estates Use executor(s) personal name(s), Ms Jane Smith

do not use name of deceased

Partnerships Use partners personal names, Mr John Smith and

do not use name of partnership Mr Michael Smith


Clubs/unincorporated bodies/ Use office bearer(s) personal Mr Michael Smith

business names names, do not use the name

of the club etc.

Superannuation funds Use the name of the trustee of Jane Smith Pty Limited

the fund, do not use the name

of the fund

* Enter the name(s) of any account (A/C) designation using < > as indicated above in designated space(s) at

Section C of the Application Form.


102


Pin cheque(s) here - do not staple

Stockland Direct Office Trust No. 2

ARSN 115 017 466

Issuer: Stockland Funds Management Limited

ABN 86 078 081 722, AFS Licence Number 241188

Adviser to Complete

Adviser's Name

Dealer Group

Email Address

Phone Number ( )

Broker/Adviser Stamp

Page 1

APPLICATION FORM

BROKER CODE

ADVISER CODE

Stockland Funds Management Limited

This Application Form must not be handed to another person unless attached to the Stockland Direct Office Trust No. 2 Product Disclosure Statement dated

25 July 2005. Refer to the Guide to the Application Form. PLEASE WRITE CLEARLY USING BLOCK LETTERS.

A

I/We

apply for

No. of Units

Note: Minimum of 25,000 Units and

thereafter in multiples of 1,000

Units

at

First Instalment per Unit

A$ 0.40

B

First Instalment

$

Note: Number of Units in Section A

multiplied by $0.40

C Applicant(s) full name and details

Title Applicant 1- Given Name or Co. Name Surname

D

Date of Birth / /

D

M

M

Y

Y

Y

Y

Title Joint Applicant 2 - Given Name or Co. Name or Account Designation Surname

D

Date of Birth / /

D

M

M

Y

Y

Y

Y

Account Designation

Address: Number and Street (must be a street address)

Suburb, City or Town State Postcode

D Mailing address (all correspondence will be sent here)

Number and Street or PO Box

Suburb, City or Town State Postcode

E Cheque details

Drawer Bank Branch

Drawer Bank Branch

Amount Payable

$

Amount Payable

$

Your cheque(s) should be made payable to "Stockland Funds Management Limited - on A/C of ". Cheques should be crossed

"not negotiable". Please ensure that you submit the correct amount. Incorrect payments may result in your Application being rejected.

F Applicant(s) TFN or ABN (if Co.) or Exemption Category

TFN

ABN

Exemption

Category:

Exemption

TFN

ABN

Category:

I/We authorise Stockland Funds Management Limited to apply these TFNs or exemptions to all my/our investments in Stockland Direct Office Trust No. 2.

G Telephone/email details

Home: Area Code

Number

Work: Area Code

Number

Email:

H

I

Are you a Stockland security holder Yes No Are you a foreign person Yes No


Page 2

J Bank account details for Trust distributions

Name of Financial Institution

BSB Number

Branch (full address)

Account Number

Name(s) in which your account is held

The account may only be in the name(s) of the registered unitholder(s).

K

I / We do not wish to receive further information about other Stockland services or products.

From time to time, the Responsible Entity may use your details to promote and market other Stockland services or products which it considers to be of

interest to you. Please tick this box if you do not want this information to be sent to you. All personal information on this Application Form will be dealt

with in accordance with Stockland's privacy policy which may be viewed at www.stockland.com.au.

L Declaration

Capitalised terms in the Application Form have the same meaning as in the PDS.

1. I / We accept acknowledge that the accompanying payment represents payment of the First Instalment only.

2. I / We direct that the Units I / we apply for (represented by Instalment Receipts) are to be held by the Security Trustee to hold in accordance with

the Security Trust Deed.

3. I / We acknowledge that I / we will be issued with an Instalment Receipt by SFML in respect of each Unit held by the Security Trustee on my / our

behalf.

4. I / We accept and agree to be bound by all the terms and conditions of the Offer to purchase Units as set out in the PDS and the terms and

conditions of the Security Trust Deed, including without limitation:

a. the obligation to pay the Security Interest Holder the Final Instalment on the Final Instalment Payment Date;

b. the obligation to pay Interest and Fees on the Final Instalment when due;

c. the obligation to pay the Security Interest Holder Interest and Fees on the Final Instalment when due until the Final Instalment Payment Date,

together with any additional default interest on, and the recovery of costs of, any unpaid amounts;

d. the requirement that no encumbrance (such as a mortgage) may be created or arise over a Unit, which could adversely affect, or make

conditional, the Security Interest Holder's Security Interest without the prior written consent of the Security Interest Holder until the Security

Interest Holder's Security Interest has been fully satisfied; and

e. the requirement that any transfer of Instalment Receipts is to be effected in the manner prescribed in the Security Trust Deed.

5. By signing / sealing the Application Form I / we declare that:

a. I / We am / are not minor(s) nor do I / we suffer from any legal disability preventing me / us from applying for Units under the Instalment

Receipt arrangements and making the commitment to pay Interest and Fees on the Final Instalment and the Final Instalment when due;

b. I / we can not withdraw my / our application except when I / we have such a right under the Corporations Act or if the Responsible Entity and

the Security Interest Holder consents;

c. I / We personally received the PDS accompanied by or attached to this Application Form and have read and understood the PDS to which this

Application Form relates;

d. I / We agree to be bound by the Constitution of the Trust;

e. I / We acknowledge that the acceptance of my / our Application and allocation of Units will be at the discretion of the Security Interest Holder

and that the Responsible Entity has the right to reject my / our Application or to allocate to me / us a lower number of Units than applied for;

f. I / We acknowledge that the information contained in the PDS is not investment advice or a recommendation that Units are suitable for me /

us, given my / our investment objectives, financial situation and particular needs;

g. by lodging this Application Form, I / we declare that this form is completed and lodged according to the PDS and that all statements made by

me / us are complete and accurate;

h. I / We acknowledge that my / our investment in Units is not a deposit with or any type of liability of the Responsible Entity, Westpac Banking

Corporation or any of their related bodies corporate;

i. I / We acknowledge that my / our investment in Units is subject to investment risks, which may impact forecast returns and loss of capital

invested. Other than under the guarantees detailed in Section 7.7.3 my / our investment is not capital or performance guaranteed. I / we

acknowledge that the Financial Information represents forecasts only;

j. Applications will only be accepted in Australian currency;

k. any income and capital distributions made by the Trust will only be paid in Australian currency;

l. if signed by an Applicant corporation, it has been signed in accordance with section 127 of the Corporations Act, the corporation's constitution

and applicable laws; and

m. if signed by an attorney, the power of attorney authorises the signing of this Application Form and no notice of revocation has been received.

I/We acknowledge that my/our investment in the Trust is subject to investment and other risks, including possible loss of income and principal invested.

I/We also acknowledge that none of the Responsible Entity, Stockland, any other member of Stockland or Westpac Group gives any guarantee or

assurance as to the performance of the Trust or the repayment of capital from the Trust or any particular rate of return.

Signature(s) - required for all Investors

Applicant 1 Signature

Joint Applicant 2 Signature

Power of Attorney

Company Seal

Sole Director and Sole Secretary

Director 1

Director 2/Secretary

Date Date Date

D

D

M

M

Y

Y

Y

Y

D

D

M

/ / / / / /

M

Y

Y

Y

Y

D

D

M

M

Y

Y

Y

Y


Pin cheque(s) here - do not staple

Stockland Direct Office Trust No. 2

ARSN 115 017 466

Issuer: Stockland Funds Management Limited

ABN 86 078 081 722, AFS Licence Number 241188

Adviser to Complete

Adviser's Name

Dealer Group

Email Address

Phone Number ( )

Broker/Adviser Stamp

Page 1

APPLICATION FORM

BROKER CODE

ADVISER CODE

Stockland Funds Management Limited

This Application Form must not be handed to another person unless attached to the Stockland Direct Office Trust No. 2 Product Disclosure Statement dated

25 July 2005. Refer to the Guide to the Application Form. PLEASE WRITE CLEARLY USING BLOCK LETTERS.

A

I/We

apply for

No. of Units

Note: Minimum of 25,000 Units and

thereafter in multiples of 1,000

Units

at

First Instalment per Unit

A$ 0.40

B

First Instalment

$

Note: Number of Units in Section A

multiplied by $0.40

C Applicant(s) full name and details

Title Applicant 1- Given Name or Co. Name Surname

D

Date of Birth / /

D

M

M

Y

Y

Y

Y

Title Joint Applicant 2 - Given Name or Co. Name or Account Designation Surname

D

Date of Birth / /

D

M

M

Y

Y

Y

Y

Account Designation

Address: Number and Street (must be a street address)

Suburb, City or Town State Postcode

D Mailing address (all correspondence will be sent here)

Number and Street or PO Box

Suburb, City or Town State Postcode

E Cheque details

Drawer Bank Branch

Drawer Bank Branch

Amount Payable

$

Amount Payable

$

Your cheque(s) should be made payable to "Stockland Funds Management Limited - on A/C of ". Cheques should be crossed

"not negotiable". Please ensure that you submit the correct amount. Incorrect payments may result in your Application being rejected.

F Applicant(s) TFN or ABN (if Co.) or Exemption Category

TFN

ABN

Exemption

Category:

Exemption

TFN

ABN

Category:

I/We authorise Stockland Funds Management Limited to apply these TFNs or exemptions to all my/our investments in Stockland Direct Office Trust No. 2.

G Telephone/email details

Home: Area Code

Number

Work: Area Code

Number

Email:

H

I

Are you a Stockland security holder Yes No Are you a foreign person Yes No


Page 2

J Bank account details for Trust distributions

Name of Financial Institution

BSB Number

Branch (full address)

Account Number

Name(s) in which your account is held

The account may only be in the name(s) of the registered unitholder(s).

K

I / We do not wish to receive further information about other Stockland services or products.

From time to time, the Responsible Entity may use your details to promote and market other Stockland services or products which it considers to be of

interest to you. Please tick this box if you do not want this information to be sent to you. All personal information on this Application Form will be dealt

with in accordance with Stockland's privacy policy which may be viewed at www.stockland.com.au.

L Declaration

Capitalised terms in the Application Form have the same meaning as in the PDS.

1. I / We accept acknowledge that the accompanying payment represents payment of the First Instalment only.

2. I / We direct that the Units I / we apply for (represented by Instalment Receipts) are to be held by the Security Trustee to hold in accordance with

the Security Trust Deed.

3. I / We acknowledge that I / we will be issued with an Instalment Receipt by SFML in respect of each Unit held by the Security Trustee on my / our

behalf.

4. I / We accept and agree to be bound by all the terms and conditions of the Offer to purchase Units as set out in the PDS and the terms and

conditions of the Security Trust Deed, including without limitation:

a. the obligation to pay the Security Interest Holder the Final Instalment on the Final Instalment Payment Date;

b. the obligation to pay Interest and Fees on the Final Instalment when due;

c. the obligation to pay the Security Interest Holder Interest and Fees on the Final Instalment when due until the Final Instalment Payment Date,

together with any additional default interest on, and the recovery of costs of, any unpaid amounts;

d. the requirement that no encumbrance (such as a mortgage) may be created or arise over a Unit, which could adversely affect, or make

conditional, the Security Interest Holder's Security Interest without the prior written consent of the Security Interest Holder until the Security

Interest Holder's Security Interest has been fully satisfied; and

e. the requirement that any transfer of Instalment Receipts is to be effected in the manner prescribed in the Security Trust Deed.

5. By signing / sealing the Application Form I / we declare that:

a. I / We am / are not minor(s) nor do I / we suffer from any legal disability preventing me / us from applying for Units under the Instalment

Receipt arrangements and making the commitment to pay Interest and Fees on the Final Instalment and the Final Instalment when due;

b. I / we can not withdraw my / our application except when I / we have such a right under the Corporations Act or if the Responsible Entity and

the Security Interest Holder consents;

c. I / We personally received the PDS accompanied by or attached to this Application Form and have read and understood the PDS to which this

Application Form relates;

d. I / We agree to be bound by the Constitution of the Trust;

e. I / We acknowledge that the acceptance of my / our Application and allocation of Units will be at the discretion of the Security Interest Holder

and that the Responsible Entity has the right to reject my / our Application or to allocate to me / us a lower number of Units than applied for;

f. I / We acknowledge that the information contained in the PDS is not investment advice or a recommendation that Units are suitable for me /

us, given my / our investment objectives, financial situation and particular needs;

g. by lodging this Application Form, I / we declare that this form is completed and lodged according to the PDS and that all statements made by

me / us are complete and accurate;

h. I / We acknowledge that my / our investment in Units is not a deposit with or any type of liability of the Responsible Entity, Westpac Banking

Corporation or any of their related bodies corporate;

i. I / We acknowledge that my / our investment in Units is subject to investment risks, which may impact forecast returns and loss of capital

invested. Other than under the guarantees detailed in Section 7.7.3 my / our investment is not capital or performance guaranteed. I / we

acknowledge that the Financial Information represents forecasts only;

j. Applications will only be accepted in Australian currency;

k. any income and capital distributions made by the Trust will only be paid in Australian currency;

l. if signed by an Applicant corporation, it has been signed in accordance with section 127 of the Corporations Act, the corporation's constitution

and applicable laws; and

m. if signed by an attorney, the power of attorney authorises the signing of this Application Form and no notice of revocation has been received.

I/We acknowledge that my/our investment in the Trust is subject to investment and other risks, including possible loss of income and principal invested.

I/We also acknowledge that none of the Responsible Entity, Stockland, any other member of Stockland or Westpac Group gives any guarantee or

assurance as to the performance of the Trust or the repayment of capital from the Trust or any particular rate of return.

Signature(s) - required for all Investors

Applicant 1 Signature

Joint Applicant 2 Signature

Power of Attorney

Company Seal

Sole Director and Sole Secretary

Director 1

Director 2/Secretary

Date Date Date

D

D

M

M

Y

Y

Y

Y

D

D

M

/ / / / / /

M

Y

Y

Y

Y

D

D

M

M

Y

Y

Y

Y


Directory

Responsible Entity

(and issuer of this PDS)

Stockland Funds Management Limited

Directors of the Responsible Entity

Graham Bradley (Chairman)

David Kent

Matthew Quinn

Tony Sherlock

Terry Williamson

Company Secretary of the

Responsible Entity

Phillip Hepburn

Responsible Entity's office

Level 16, 157 Liverpool Street

Sydney NSW 2000

Mail: GPO Box 998

Sydney NSW 2001

Telephone: (02) 9020 8320 or

1300 652 748 (local call cost)

Facsimile: (02) 9321 1592

Email: stocklanddirect@stockland.com.au

Internet:

www.stockland.com.au/unlistedpropertyfunds

Sole distributor

Westpac Banking Corporation

Level 8, 255 Elizabeth Street

Sydney NSW 2000

Mail: Stockland Direct Office Trust No. 2

c/- Westpac Banking Corporation

Reply Paid A990

Sydney South NSW 1234

Telephone: 1800 024 420

Internet:

www.westpac.com.au/structuredinvestments

Underwriter (85%), Financier and

Limited Liquidity Facility provider

Westpac Banking Corporation

Level 8, 255 Elizabeth Street

Sydney NSW 2000

Underwriter (15%)

Stockland Trust Management Limited as responsible

entity of Stockland Trust

Level 16, 157 Liverpool Street

Sydney NSW 2000

Registrar

Computershare Investor Services Pty Limited

Level 3, 60 Carrington Street

Sydney NSW 2000

Mail: GPO Box 7045

Sydney NSW 2001

Telephone: 1300 723 909

Facsimile: (02) 8234 5050

Email: sydney.services@computershare.com.au

Custodian

Trust Company of Australia Limited

Level 4, 35 Clarence Street

Sydney NSW 2000

Auditor

KPMG

10 Shelley Street

Sydney NSW 2000

Solicitors to the issuer

Mallesons Stephen Jaques

Level 60, 1 Farrer Place

Sydney NSW 2000


Stockland Funds Management Limited

ABN 86 078 081 722, AFS Licence Number 241188

Responsible Entity of Stockland Direct Office Trust No. 2

Westpac Banking Corporation

ABN 33 007 457 141

Joint Underwriter, Financier and Limited Liquidity Facility Provider

Stockland I Shopping Centres I Commercial & Industrial I Residential Communities I Apartments I Hotels I Unlisted Property Funds I


Financial Services Guide ("FSG')

Financial Services Guide of Permanent Trustee

Company Limited ("Permanent") ABN 21 000

000 993 (AFS Licence Number 235145) in

relation to the offer of Units in Stockland Direct

Office Trust No. 2 under the Product Disclosure

Statement ("PDS") issued by Stockland Funds

Management Limited ("Stockland").

Capitalised terms used but not defined in this FSG

have the same meaning as in the PDS.

What is the purpose of this Financial Services

Guide ("FSG")

It is to provide information about Permanent in its

capacity as the Security Trustee (as referred to in the

PDS), the role and remuneration of the Security

Trustee and its representatives in the context of the

offer of Units, so that you may take these into

account when you make your decision whether or

not to participate in the offer of Units which

involves the provision of financial services by the

Security Trustee. This FSG also provides

information about what to do if you have a

complaint against the Security Trustee.

Who is the Security Trustee in relation to the

Units

Permanent is the Security Trustee. Permanent,

established in 1887, is a wholly owned subsidiary of

Trust Company of Australia Limited, a publicly

listed company established in 1885 ("Trust").

Permanent holds its own Australian Financial

Services Licence ("AFS licence") authorising the

provision of financial services.

The FSG has been prepared by, and is the

responsibility of, the Security Trustee. The Security

Trustee is neither responsible nor liable for any part

of the PDS.

What financial services will the Security Trustee

provide to Investors in relation to the Units

Following payment of the First Instalment on

Application, Investors will receive Instalment

Receipts which they will hold until the Final

Instalment is paid, though they can transfer or sell

their Instalment Receipts (and hence their interest in

the underlying Units) prior to the Final Instalment

Payment Date. While the Final Instalment remains

unpaid, legal title to the Units will be held by the

Security Trustee.

What is the relationship between the Security

Trustee and Stockland

Permanent and Stockland are not members of the

same group of companies and are not related in any

way.

How is the Security Trustee remunerated for the

services it provides as Security Trustee

Permanent will receive from Stockland a fee of

$8,000 per annum (excluding GST) which is payable

by quarterly instalments with the first payment to be

made on or about 31 December 2005. This annual

fee may be varied by agreement with Stockland

from time to time.

Our Staff

Our staff are salaried employees of Permanent.

When they provide you with services on our behalf,

they do not get any payments, commission or other

benefits directly from the services provided. Some

employees may periodically be entitled to bonuses

or non-monetary benefits, based on their own

performance and/or the performance of their

business unit as a whole. Various factors are taken

into account when assessing such performance,

including the total value of assets invested through

advisory services that we provide and an individual

adviser's contribution towards this. Non-monetary

benefits typically involve attendance at conventions

and conferences.

How can you contact the Security Trustee

In the event you need to contact the Security Trustee

you may:

• call us or write to us at any or our offices by

using the contact details at the back of this FSG

• visit our website at www.trust.com.au

• use your adviser's specific contact details.

Legal\100618354.1


2.

Privacy

In order to be able to provide you with services, we

may need to obtain personal information about you

such as your name, address and telephone number.

We may disclosure your personal information to our

service providers, to persons who act on your behalf

in relation to any of the assets in your portfolio and

to any other third party where the disclosure is

required by law.

Permanent and other companies in the Trust Group

may also use your personal information to provide

you with information on products or other services.

If you do not wish to receive such information

please contact us.

To obtain further information on our Privacy Policy,

please ask your advisor or visit our website on

www.trust.com.au.

What should you do if you have a complaint

We have procedures in place to properly consider

and deal with any enquires or complaints within 30

days of receipt.

Contact your adviser and inform them of your

complaint.

Write to:

The Manager, Structured Finance

Corporate Services Division

35 Clarence Street Sydney 2000

We are a member of the Financial industry

Complaints Services ("FICS") an independent

external industry complaints resolution scheme. If

you are not satisfied with the response from us you

can contact FICS:

PO Box 579 Collins Street West

Melbourne VIC 8007

Ph: 1800 780 808

The Australian Securities and Investment

Commission also has a freecall infoline on 1300 300

630 where you may obtain further information about

your rights or make a complaint.

Permanent Trustee Company Limited

ABN 21 000 000 993

Website: www.trust.com.au

Freecall: 1 800 650 358

Email: info.trust.com.au

New South Wales

Sydney

Level 4, 35 Clarence Street Sydney NSW 2000

GPO Box 4270 Sydney NSW 2001

Telephone: (02) 8295 8100

Facsimile (02) 8295 8659

Victoria

Melbourne

151 Rathdowne Street Carlton South VIC 3053

PO Box 673 Carlton South VIC 3053

Telephone: (03) 9665 0200

Facsimile: (03) 9639 0286

Queensland

Brisbane

213-217 St. Paul's Terrace Brisbane QLD 4000

GPO Box 441 Brisbane QLD 4001

Telephone: (07) 3634 9750

Facsimile: (07) 3252 3513

Townsville

Level 4, Suncorp Metway Plaza

61-73 Sturt Street Townsville QLD 4810

PO Box 990 Townsville QLD 4810

Telephone: (07) 4771 5114

Facsimile: (07) 4772 5260

This FSG is dated 11 July 2005

Legal\100618354.1

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