Fund update

The primary assets of the fund are two loans to the Becton Office Fund: one loan of $25 million and another of $20 million. The security for these loans is a second mortgage over six assets in the BOF portfolio and a third mortgage over five assets.

The 30 June 2010 audit of the fund’s accounts includes an impairment note reducing the NTA at 30 June 2010 from $1.2344 to $0.8913. This reduction represents accrued earnings of $0.3200 as well as a small capital reduction. Accrued interest since 30 June 2010 is included in the 30 September NTA of $0.9741 per unit.

Distributions and redemptions

The fund is closed to redemptions and has suspended distributions.

Update on Becton Office Fund loans

During the June quarter, the fund extended the expiry dates of its loans to the Becton Office Fund. It has since further extended these expiries to 31 October 2010. It is likely these expiries will need to continue to be extended in line with any further extensions of maturity dates of the fund’s borrowing facility with BOS International (Australia) Ltd, until such time as a capital management solution for the Becton Office Fund is achieved. However any futher extension of the BOS International facility is awaiting consent of BOS International (Australia) Limited to the sale of the Funds Management business to 360 Capital Group.

Sale of Funds Management business

On 6 October 2010, Becton announced the sale of its Funds Management business to 360 Capital Group. We are working on obtaining all the necessary approvals and settling the sale before the end of the calendar year. The sale is the culmination of more than two years’ work to achieve a longer term capital management solution for the funds. It will provide the funds with the backing of a debt-free specialist property funds manager which in turn will provide the funds with enhanced prospects of attracting capital where needed. For further information about the sale please refer to the CEO’s letter in this edition of Review and to the FAQs on the Becton Investment Management website: www.bim.com.au.