Fund Updates

  • Dated 10/10/18 – Temporary Amendment to Off-market Redemption Facility and Announcement of On-market Buyback

Aurora Funds Management Limited (AFSL 222110) (“Aurora”) as responsible entity for the Aurora Property Buy-Write Income Trust (“AUP” of “Fund”) provides the following update in relation to the Fund’s off-market redemption facility and a proposed on-market unit buy-back for up to 10% of the outstanding AUP units on issue.

Off-market Redemption Facility

On 22 March 2018, Aurora provided AUP unitholders with notice of a temporary modification in the Fund’s investment strategy, to allow investments in unlisted international property related equity and debt instruments, specifically in relation to the existing North American commercial property assets of RNY Property Trust (“RNY”).  Aurora holds over 80% of the units in RNY.

On 3 September 2018, RNY announced that Aurora, as investment manager of RNY, had successfully completed a loan modification deed with RNY’s lender, ACORE Capital.  The loan modification resulted in, amongst other things, the curing of the existing loan default over the five remaining commercial property assets and the waiving USD$4.4 million in accrued default interest.  In order to comply with the value accretive outcomes negotiated through the loan modification, RNY was required to make a series of loan paydowns to satisfy certain obligations.  These paydowns were made from RNY’s and its associated entities existing cash reserves, and by short-term loans provided by AUP to RNY and its associated entities.  These paydowns came into effect on 31 August 2018 (Melbourne time), in conjunction with the closing of the loan modification deed.

In light of these short-term loans provided by AUP, Aurora believes the Fund does not currently satisfy all the requisite conditions set by the ASX in relation to the waivers granted to the Fund (these conditions are set out in AUP’s most recent Product Disclosure Statement (“PDS”)).  Specifically, the Fund does not currently meet the condition that requires it to invest solely in quoted fungible financial products and cash, therefore it is unable to rely upon these ASX waivers at this time, and cannot process off-market unit redemptions until further notice.  The effect of this on redemptions which have been requested but not processed is discussed below.

It is Aurora’s intention as soon as practical to restore the investments of the Fund to those which satisfy the ASX conditions, therefore enabling the Fund to resume its reliance on these ASX waivers to process off-market redemptions.

On-market Buy-back

Aurora, as responsible entity of AUP, announces its intention to commence an on-market buy-back for up to 10% of AUP’s issued units, thereby providing unitholders with an additional ability to exit the Fund.

Current outstanding redemptions

Aurora will process and redeem all redemptions received and accepted by it prior to 31 August 2018 as soon as practicable in accordance with its Constitution.  Aurora will also allow those unitholders who have submitted their redemption request on or after 31 August 2018 to cancel these requests if they so wish.

If you have any queries about the matters raised in this letter, please call me on 0411 886 626 or adrian@aurorafunds.com.au.

Dated 01/06/18 – Distribution Policy Update

Aurora Funds Management Limited (AFSL 222110) (“Aurora”) as responsible entity for the Aurora Property Buy-Write Income Trust (“AUP”), provides the following update in relation to AUP’s Distribution Policy.

AUP currently pays a quarterly distribution to unitholders of 2% of Net Asset Value (NAV), or, 8% per annum. Effective 30 June 2018, the quarterly distribution rate for the Fund will be adjusted to the greater of 1% of NAV (4% per annum) or distributable taxable income.

  • Dated 22/3/18 – Temporary Amendment to Investment Strategy

Aurora Funds Management Limited (AFSL 222110) (“Aurora”) as responsible entity for the Aurora Property Buy-Write Income Trust (“AUP”) provides the following update in relation to the investment strategy of AUP.

AUP is the largest unitholder in RNY Property Trust (“RNY”), with Aurora and its funds collectively holding 80.96% of the total issued units. On 19 January 2018, Aurora called a unitholder meeting to consider two (2) resolutions, being (i) the removal of RNY’s current responsible entity (RE), RNY Australia Management Limited (RAML), and (ii) the appointment of Huntley Management Limited (“Huntley”) as RE.

The unitholder meeting was held 12 February 2018, and both resolutions were approved with 99.9% of unitholder votes in favour of the resolutions. The change of RE will not however be complete until Huntley receives approval for a variation of its Australian Financial Services Licence from the Australian Securities and Investments Commission (ASIC), which is currently under consideration.

In November 2017, ASIC’s service charter as set out in Report 553 was issued, which detailed changes to target timeframes for processing licence applications, being:

(a) within 150 days of receiving a complete application in at least 70% of cases (previously 60 days and at best 35 days); and

(b) within 240 days of receiving a complete application in at least 90% of cases (previously 120 days).

Unfortunately, the timeline for this approval is completely out of Aurora’s hands, and as such Aurora needs to take steps to ensure unitholder value is preserved in the interim.

Accordingly, Aurora gives 30 days’ notice to unitholders of a temporary modification in AUP’s investment strategy, to allow investments in unlisted international property related equity and debt instruments, specifically in relation to RNY’s existing North American assets.

It is Aurora’s intention to revert the investment strategy back to its current mandate as soon as practical after any RNY restructure is complete.

  • Dated 29/11/17 – Payment of Offer Consideration RNY update

Aurora had previously understood that the cheques in payment of the Offer consideration amounts were posted on 21 November 2017.  However, it appears from  RAML’s announcement, and from information obtained independently by Aurora, that this may not have been the case as many accepting Unit Holders are yet to receive their payments.

Aurora confirms that, despite the unauthorised withdrawal of funds from AUP’s bank account and the confusion concerning the despatch of cheques for payment of the Offer consideration, AUP has the necessary funds to meet its obligations in respect of the Offer.

Aurora will cancel all the unpresented cheques and will re-issue those cheques. Aurora will make a separate announcement confirming dispatch of the re-issued cheques. Aurora apologises for any inconvenience caused.

Read more here.

  • Dated 26/04/17 – Appointment of Chief Operating Officer

Aurora Funds Management Limited is pleased to announce it has expanded its management team with the appointment of Mr Ben Norman to the role of Chief Operating Officer, effective 26 April 2017.

Ben is a qualified Chartered Accountant, with over 16 years of professional and industry experience. Prior to joining Aurora, Ben was a Director in Ernst & Young’s Transaction Advisory Services division, where he spent over 9 years working on numerous due diligence, performance improvement, restructuring, turnaround, financial modelling and transaction integration engagements with clients in all industry sectors. While working with Ernst & Young, Ben also performed extended secondments with global financier GE Capital in a senior risk and compliance role and with ASX listed Origin Energy Limited as a finance manager in Origin’s upstream business.

Prior to joining Ernst & Young, Ben held a senior finance position with gas transmission business Epic Energy (which was owned by the ASX listed Hastings Diversified Utilities Fund, backed by Westpac Banking Corporation) where he was responsible for overall financial control and compliance.

Managing Director, John Patton, commented, “we are delighted to have secured the services of a very senior and experienced industry professional to Aurora’s management team. Ben Norman’s extensive professional and industry experience will be a valuable addition to Aurora’s capabilities”.

Operational Update

In light of the changes that have taken place within the business, Aurora has decided to update and refresh its Product Disclosure Statement (PDS). Pending this review being finalized, Aurora has withdrawn its PDS for new retail applications, however all existing terms will continue to apply save as varied in accordance with the terms of the PDS. Upon the lodgment of an updated PDS, the fund will then accept applications from new retail investors.

  • Dated 07/12/16 – Voting Results of the Unitholder Meeting

In accordance with Listing Rule 3.13.2 and section 251AA of the Corporations Act 2001 (Cth), we advise that details of the resolutions and proxies received in respect of each resolution put to the General Meeting of the Aurora Property Buy-Write Income Trust, are set out in the attached proxy summary.

Resolution 1 – Removal of Responsible Entity was not carried.

Resolution 2 – Appointment of New Responsible Entity was not carried.

Aurora welcomes the outcome of the meeting, and now that this distraction is behind us, our capable and experienced team look forward to implementing the investment objectives of AUP for the benefit of all unitholders. Accordingly, Aurora will continue to act as the responsible entity of AUP and seek to accomplish the investment objectives and strategy of AUP.

  • Dated 27/10/16 – Investments

Aurora Funds Management Limited (AFML) in conjunction with the Aurora Fortitude Absolute Return Fund (AFARF) has become an investor in the Aurora Property Buy-Write Income Trust (ASX: AUP).

 The rationale for these investments is as follows:

  • AFML has invested a portion of its funds in AUP in support of the investment activities undertaken by AUP, further aligning the manager with the performance of the Fund;
  • AFARF has a relatively high level of cash on hand at present, enabling redemption requests to be processed quickly and efficiently.  As such, the investment by AFARF in the AUP enables a portion of these funds to be actively managed on an ‘at call’ basis;
  • AFML will rebate all management fees charged in AUP to AFARF to ensure no increased management expense to investors; and
  • With an expanded investment pool within AUP, it follows that this should lead to a lower Management Expense Ratio for this Fund.
  • Dated 08/07/2016 – Operating Expenses

Effective 8 August 2016, Aurora Funds Management Limited may begin charging all of its normal operating expenses to the Trust in accordance with the Constitution.

  • Dated 18/9/2015 – Annual Reporting and Fund Disclosure as at 30th June 2015 for the Master Fund.

Asset Allocation: 99% invested in equities & 1% invested in cash.

Liquidity Profile: 88% within 10 business days and 12% within three months.

Maturity profile of the Fund’s liabilities:

Leverage: No leverage

Derivative Counterparties: UBS AG.

Investment Returns: +8.65% for the 2014/15 financial year.

Key Service Providers: Changed Primer Broker from JP Morgan to UBS.

  • Dated 1/9/2015 – New Product Disclosure Statement (PDS) issued

Aurora is pleased to announce a new Product Disclosure Statement (PDS) has been issued. The PDS replaces the product disclosure statement dated 26 February 2009. The new PDS reflects:

    • A reduction of management fees to 1.03% per annum (including GST);
    • An increase in the performance fee hurdle to the RBA Cash Rate plus 1%; and
    • The introduction of off market daily applications and redemptions.
  • Dated 1/6/2015 – Reduction in Management Fee

From 1 July 2015 the Management Fee of the Aurora Property Buy-Write Income Trust will be reduced from 2.05% per annum (including GST) to 1.33% per annum (including GST). The current expense recovery of 0.1538% (including GST) will also be removed from 1 July 2015.

  • Dated 2/7/2012 – GST Update

On 29 May 2012, amendments to the GST financial services regulations were released, including wide ranging new regulations relating to the reduced input tax credit treatment of supplies acquired by managed investment schemes and superannuation funds. The new rules apply from 1 July 2012.

The amendment regulations introduce a new item 32 of GST regulation 70-5.02(2) under which supplies acquired by a ‘recognised trust scheme’ on or after 1 July 2012 will be eligible for a 55% reduced input tax credit (RITC). Certain specified services will remain eligible for the 75% RITC.

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