September 2018 INVESTOR NEWSLETTER · INVESTOR NEWSLETTER. September 2018. 10: 30th anniversary celebration

INVESTORNEWSLETTER

September 2018

VIL_43402_VBC_Quarterly_Newsletter_FA.indd 1 12/9/18 10:05 am

COMPANYNEWS

Cover and opposite page: images from the 30th anniversary celebration.

TO OUR VALUED SHAREHOLDERS AND INVESTORS

Thank you to all our investors and shareholders who joined us on 27 July at the National Arboretum to celebrate Village’s 30th anniversary and the retirement of our founder, Bob Winnel. It was a great evening which saw some moving testimonials to Bob, impressive operatic performances and a video reliving the last 30 years of Village’s history. Bob will continue to be actively involved with the business through his role as a non-executive Director and Chairman of the Acquisition Policy and Funding Committee.

After years of unsustainable rises it is not surprising we are now seeing an easing in the property market with sales volumes declining, prices having peaked and under pressure, stock levels building and properties on the market longer. This is being further frustrated by the continued impact of the Banking Royal Commission and recent political and economic events. Despite this, we remain focussed on delivering our projects well and expect good acquisition opportunities to emerge over the next 12-18 months.

As many of you will know the South Jerrabomberra project has been one of the most challenging in the Company’s 30-year history. We are thrilled that after 16 years of work in developing and refining the South Jerrabomberra masterplan, the NSW Government’s Joint Regional Planning Panel has approved our revised Development Application (DA) for stage 1. This will allow for the development of the first 318 housing lots and 9 medium density sites enabling up to 630 dwellings. The DA approval follows the approvals of the State Planning Agreement, the QPRC Local Infrastructure Plan, the Local Planning Agreement, the Development Control Plan and the Review of Environmental Factors, which resolved several state and local infrastructure issues.

Because of the compelling benefits associated with undertaking the development of the Tralee syndicate land in conjunction with other land under the direct control of Village (Forest and Morrison lands) and the additional capital needs of the new expanded project, an offer was made to payout the existing Tralee syndicate members on 3 September. This was met with overwhelming support from the investors. The larger South Jerrabomberra project will be offered for a new syndication to the broader

VBC investor group at the quarterly investor session on 25 September.

Construction on the first stage of townhouses at Yarraman is expected to be progressively completed between November 2018 and February 2019 with the building contract for the next 64 townhouses having been awarded to a different builder, Level 10. We are pleased to announce the establishment of Argyle Building, Village’s construction arm based in Melbourne. Argyle Building will undertake the construction of 62 townhouses in the final two stages of Yarraman, 51 of which will involve entering into building contracts directly with buyers under the “split contract” method of sale.

Demolition work has commenced on site at South Morang with the launch of sales and marketing scheduled for September.

We are nearing completion of the audit of the FY18 financial performance of the Group. We are expecting to announce a result in excess of last year’s result. The Annual General Meeting will be held on 21 November at the East Hotel in Kingston and all shareholders are encouraged to attend.

After spending 22 years with Village, Sharyn Oppenhuis has decided to retire. Sharyn has been an integral part of the Village history and has been a leading member of our sales team. Thank you Sharyn for your dedication and loyalty over the years – we are sad to see you go but happy for you as you start this new chapter of your life.

Best regards,

Travis Doherty Chief Executive Officer

VILLAGE BUILDING COINVESTOR NEWSLETTERSeptember 201802



VILLAGEBUILDING.COM.AU

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THE BRICKWORKS AT BULLI

This has proven to be a very successful project with syndicate investors having been paid the final profit distribution in April 2018.

NSW

THE SUMMIT AT COFFS HARBOURThe detailed design of the next stage is nearing completion which will facilitate the next phase of construction and the sales release of the next tranche of land lots. These are expected to be released to the market in September.

Construction of Pinnacle Way is complete, which includes 11 lots that are all sold. Registration of these lots is now in its final stages with documents lodged to the titles office. Settlements are anticipated to commence in September.

Engineering designs for rock face stabilization measures are being undertaken for excavated sites in other parts of the site in preparation for either land sale or townhouse development, with final pricing and analysis due by mid-September.

NSW

THE MEADOWS AT AUSTRAL 1

Civil works are complete with the exception of some drainage works within the Jemena high pressure gas easement which crosses the final stage of the development. The 8 land lots that have been impacted by these works should settle in the 2019 financial year.

Sales contracts have been exchanged on 86 of the 92 land lots and 78 have settled to date.

NSW

NSW

THE VILLAGE AT CORRIMAL

We have sold 21 of the 66 apartments/villas which are being released progressively to the market.

Demolition on the site is complete and construction of the apartments has commenced.

Along with the broader Sydney market, the Wollongong market has softened with enquiry levels falling. In an effort to stimulate enquiry we will be embarking upon a Spring marketing campaign. In addition, we are closely monitoring competitor activity to ensure that our pricing remains competitive.

PROJECTUPDATES



AUSTRAL 3

Following the lodgement of the Development Application in December 2017, the only outstanding issue to resolve prior to Development Consent is an easement agreement with an adjoining owner. Commencement of construction is scheduled to occur in March 2019.

NSW

PARKLANDS AT AUSTRAL 2

Civil works for the first stage of 49 lots are now complete. 39 sales have exchanged and settlements are anticipated to commence in October 2018.

Civil works on the next stage of 31 lots are nearing completion with 26 sales contracts having exchanged and settlements currently scheduled to commence in late 2018.

The balance of the project comprises 129 lots in two stages of which 25 have been sold to date (15 of these have exchanged).

In response to a slowing of sales rates in Sydney’s growth centres, we have increased our marketing effort and put greater effort into forming partnerships with local builders and agents.

NSW

SOUTH JERRABOMBERRA

A milestone has been achieved in this period with the Joint Regional Planning Panel approving the stage 1 Development Application for South Jerrabomberra at its meeting on 2 August, for the first 318 detached lots and 9 superlots.

In August, the QPRC also approved a draft planning proposal to rezone the balance of the residential land in South Jerrabomberra, including the Forest and Morrison lands over which Village has control. It is anticipated a gateway approval will be received from the Department

of Planning in September at which point QPRC will exhibit a draft LEP for the rezoning of the balance of South Jerrabomberra.

As mentioned earlier in this newsletter, we are in the process of dissolving the CEC4 (Tralee) syndicate and offering a new expanded project for syndication comprising the Tralee and Forest/Morrison lands (total yield 1,250 dwellings). The new syndication proposal will be presented to the investor meeting on 25 September.

NSW



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PROJECTUPDATES

THE RESIDENCESAlternative design options are being considered and assessed on our dual occupancy Mr Fluffy sites spread across Hackett, Garran, Chifley and Farrer.

Sales and marketing for the individual dwellings will commence progressively from September 2018. The site in Watson has been sold as a land only product and construction on the first site in Garran commenced in June 2018. Construction of the balance of 12 homes on 6 sites is programmed to start progressively between September 2018 and November 2018.

ACT

WESTSIDE AT INDOOROOPILLY

99 of the 119 apartments have now settled and a further 2 are currently on hold under expression of interest.

The apartment market in Brisbane remains very challenging. We have offered discounted pricing in an effort to sell down the remaining stock and are steadily executing a range of locally targeted marketing initiatives.

QLD

CARRAMAR AT MONCRIEFF

Settlements have been finalised on all 42 townhouses in our Carramar development in Moncrieff in the ACT.

ACT

WOODLINKS VILLAGE AT COLLINGWOOD PARK

Minor amendments have been undertaken to the overall masterplan and the total yield for the project has increased slightly to 780 lots. 167 of these lots have been released, constructed and registered to date, with a further 10 lots released ‘off the plan’ in the next stage of the development. Of these 177 lots, 136 lots have settled and a further 26 lots are under contract conditional on finance. Tightening lending criteria and the ability to access finance with low deposits is the key challenge for potential buyers.

The next stage comprising 35 lots has now been tendered and the civil contract is in the process of being finalised.

QLD



YARRAMAN VILLAGE AT NOBLE PARK

Construction of the first 32 of the 158 townhouses, while behind schedule, is well advanced. We are closely managing the construction program with the builder, JG King, to enable progressive handovers with purchasers between November 2018 and February 2019.

Civil works for stages 2 and 3 totalling 39 dwellings are now complete and the builder, Level 10, has commenced

construction of these townhouses. Civil works are in progress on the remaining stages and are expected to be complete by the end of September. Level 10 has been appointed as the builder for the 25 townhouses in stage 4 as well. As stated earlier, the remaining 62 townhouses in stages 5 and 6 will be constructed by Village’s recently established Melbourne building arm, Argyle Building, and are scheduled to be released to the market in September.

VIC

VIC

TRILOGY AT SOUTH MORANG

A town planning permit for 239 townhouses has been received from the City of Whittlesea. Civil tenders have now closed with two tenderers shortlisted.

The tenant has vacated the site and demolition is underway and expected to be completed in September.

Sales and marketing will commence during September and will coincide with the opening of the new sales suite.

ACT

THE QUARTERS AT WESTON

We are progressing the preparation of the first stage DA following on from a detailed community consultation phase which resulted in a number of amendments to the masterplan. The development plan is currently yielding 245 dwellings in a mix of detached blocks, terraces and apartments. The first stage Development Application will be for 82 sites and is anticipated to be lodged in October/November.



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INVESTMENTOPPORTUNITIES

SHAREHOLDERINFORMATIONDIVIDEND

The Company paid a fully franked 3.0 cent interim dividend for the 2018 financial year on 15 June 2018.

The Board purposely held the DRP price at 85 cents, representing a 36% discount on the net asset backing per share at 30 June 2017, to encourage participation in the DRP.

The Company benefits by shareholders participating in the DRP as it assists in further strengthening the Company’s ability to take advantage of new development opportunities through an expansion of its capital base. Participation in the DRP is optional

and offered to all shareholders thereby providing equal opportunity to maintain proportional interest in the Company.

A copy of the Company’s Dividend Reinvestment Plan is available at www.villagebuilding.com.au/invest or at Computershare.

The quarterly dividend for CRPS-2 shares will be paid in late September 2018.

SOUTH JERRABOMBERRA

The new syndicated project at South Jerrabomberra which encompasses the Tralee land holdings and the adjacent Forest and Morrison lands will be presented at the September quarterly investor session on Tuesday 25 September and will be open for investment.

INVESTMENT PROPERTIES

As advised previously, substantial discounts are available to shareholders and investors on apartments in our Westside at Indooroopilly, Brisbane and The Village at Corrimal, Wollongong developments.

Enquiries on these apartments should be directed to Melissa Anderson on 0458 200 525 or [email protected].

SECURED NOTES

Secured notes are available for investment and form an important part of the Company’s funding structure. These notes assist in reducing the weighted average cost of capital of the Company which currently sits at 9.46%.

Further investment in the Series F notes and the 1 year Series D notes has now closed. However, notes in the other Series with terms of 2 to 5 years are still available and offer attractive investment rates.

Secured notes are only available to sophisticated and professional investors. The notes application document is available on request.

SHARES

Ordinary shares can be purchased from the Company at the Dividend Reinvestment Plan price of 85 cents per share. Share purchases are subject to Board approval.

For enquiries regarding secured notes, shares or any other investment matter please contact Vince Whiteside on 0404 891 150 or [email protected].



VBC Forecast Investor Returns as at 05/09/2018

Project Type Date % of Total

Woodlinks Loan Repayment 31/03/2019 100.00%

Indooroopilly Profit Distribution 2 30/11/2018 38.73%

Profit Distribution 3 31/12/2018 24.21%


Austral 1 Profit Distribution 1 31/10/2018 9.88%



Austral 2 Equity Distribution 1 31/03/2019 17.33%

South Morang Equity Call 3 31/10/2018 (17.06%)

Corrimal Equity Call 3 31/10/2018 (20.38%)

Equity Call 4 31/01/2019 (6.75%)

Austral 3 Equity Call 2 31/12/2018 (15.84%)

Weston Equity Call 2 26/10/2018 (5.00%)

Equity Call 3 31/01/2019 (3.33%)

Noble Park Equity / Profits Future

Note: The above information is indicative only and based on best estimates at the date of issue and is subject to change.

Bob Winnel at the 30th anniversary celebration.



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WORK HEALTH & SAFETYINFORMATION

BIG BANANA

The ongoing commitment to safety continues with weekly safety inspections and regular audits. As adopted at the last board meeting, Sean Kenny (or another qualified external auditor) will conduct quarterly audits on the park and the Operations Manager (Russell Lee) will complete a Cert IV in WHS and will conduct a full audit on the park every month. Regular staff training, annual reinduction and orientation of new staff members also contributes to the “safety first” philosophy at the park.

A full safety audit was completed during this quarter with The Big Banana achieving a perfect score of 100%. Internal staff training remains a high priority as does the ongoing routine maintenance allowing us to have less incidents, and reduced downtime.

SAFETY FIRST

Village Building adopts a “safety first” culture contributing to a safer work environment for staff and contractors alike. We remain incident and injury free across all Village Housing sites. Regular internal safety audits and inspections continue to occur and are proving effective in identifying and mitigating risk prior to incidents occurring.

The Big Banana, Coffs Harbour, NSW



STAFF PROFILEPAUL RODDAM

Paul Roddam - Regional Manager

30th anniversary celebration

Paul has been part of the Village team for 12 years and brings a broad knowledge of the building and development industry gained from 25 years working as a builder and developer.

Before joining Village, Paul owned and ran a successful building company on the NSW South Coast, where he specialized in architecturally designed homes, renovations, extensions and small scale commercial builds.

He started with Village as the Housing Manager for Wollongong looking after the contract building program and would later set up and run Wollongong’s self-build business which would go on to build over 230 houses in Edgewood and Bulli.

Paul is currently the Regional Manager for Illawarra and is responsible for the accountability and oversight of the Wollongong operations. He has a passion for construction and delivering places people can call home.



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The Village Building Co LimitedP. (02) 6241 6844

W. www.villagebuilding.com.au


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September 2018 INVESTOR NEWSLETTER · INVESTOR NEWSLETTER. September 2018. 10: 30th anniversary celebration