Eden 218

(1) Offer Detail

The offer is for B Shares in Eden 218. Eden Development No. 1 LP owns all A Shares in Eden 218. There are no other shares or other financial products on issue.

The key details of the offer of B Shares are summarised below.

(a) Minimum investment target: $300,000 (for 30 B Shares)*

(b) Maximum investment target: $1,500,000 (for 150 B Shares)*

(c) Share class offered:  BShares (see Section 7 below for more information on B Shares)

(d) Share price: $10,000* per B Share

(e) Minimum investment: 5 (Five) B Shares(ie. $50,000)*

 

This information is a summary only of terms in the Subscription Agreement provided with this offer. The offer is made under the Subscription Agreement and is subject to Eden 218’s Constitution and Shareholders’ Agreement. We recommend you read these documents before subscribing for any shares under this offer.

 

 

(2) Business

Eden 218 is carrying out a property development project at 218 Manukau Road, Epsom.  The Resource Consent application was lodged on 14 April 2020 and the Building Consent application was lodged on 30 September 2020, an RFI (request for information) from Auckland Council has been replied to andEden 218 does not anticipate any issues with the applicationsUpon completion of a successful crowdfunding offer, Eden 218 will develop the property according to the issued Resource Consent and Building Consent.

(a) Key Contractors

• X Studio Architects (www.xstudio.co.nz) completed the building plans for the development.
• Chester Consultants (www.chester.co.nz) completed the survey plan and fire design.
• Landworks Consulting is the Civil Engineer.
• SOLA Landscape Architects (www.sola.net.nz) completed the landscaping design.
• MEC Engineering Consultants (www.mec.net.nz) completed the structure plan.
• Auckland Construction Group (www.nzacg.co.nz) has tendered to be the head contractor, and the parties are negotiating the terms of the tender. The head contractor for the project has yet to be finalised.

(b) Development Details

Statistics indicate that the demand of quality-built medium density development is strong in the Double Grammar Zone. The prime location and the excellent building quality will support thesuccess of this fantastic project.

Address: 218 Manukau Road, Epsom, Auckland 1023 (Lot 1 DP 17756)

Suburban: Epsom, Auckland

Land Size: 810 sqm

Zoning: Business Mixed Used

Building Coverage: 345 sqm 42.6%

Plan: 3 Duplex Building (6 three-story units)

(c) Property Details

Eden Development No. 1 LP owns the property at 218 Manukau Road, Epsom. Eden 218 will purchase the property from Eden Development No.1 LP for $3,500,000 + GST.See Section 4(e) below on how the property purchase Price is funded.  Legal ownership of the property will be transferred to Eden 218 from Eden Development No. 1 LP within approximately 15 working days after the successful crowdfunding by Eden 218 and subject to B Shares having been issued to the relevant investors.

The land cost is $3,500,000 + GST, and the total development cost is approximately $3,955,074 + GST bringing the total cost of the project to approximately $7,455,074 + GST. The estimated market value of the development is approximately $9,159,130 + GST (see Section 11 below for more information about our forecast and valuation).

(d) The Location

Epsom is a suburb of Auckland, New Zealand. It is located in the center of the Auckland isthmus between Mount Eden and Greenlane, New Zealand, south of Newmarket, and five km south of Auckland CBD. Epsom has always been one of Auckland’s most prestigious suburbs – known for its beautiful historic homes, famous residents and being close to most of the top schools.

Flanked by two of Auckland’s largest parks – Auckland Domain and One Tree Hill/Cornwall Park – the area has many large villas and bungalows on big sections offering families the perfect environment in which to live.The area mainly settled around the turn of last century, and although many of the homes are old, there are pockets of new townhouses enjoying the tree-lined roads and abundant greenery. With good access to the motorways as well as major arterial roads, travelling to and from Epsom is a breeze – although Manukau Rd and Gillies Ave can get clogged at times, but at least the scenery is pretty!

The makeup of residents has changed remarkably in recent years with a strong Asian community making the area their home. Many of the long-standing families who have lived in the area for decades have moved on – with many of their homesteads being bowled and replaced with modern townhouses – finding the upkeep of their grounds costly and time-consuming. There are also many families who live in the area, especially those with secondary school-age children. The proximity to many private and public schools makes Epsom a good choice for parents not wanting to travel too far for the school round. And occasionally, some children will even walk to school.

The major road running through Epsom is Manukau Road. Manukau Road links central Auckland on the east coast with its airport and its west coast harbor, the port of neighboring Onehunga. It was one of the 19th century’s main routes south from Auckland. The main route was Great South Road which forms Epsom’s north-eastern boundary with Remuera. The link to the Port of Onehunga meant Manukau Road became the route for horse buses, horse trams and, after 1902, electric trams. Many suburban houses and villas were built along it.

(e) Source & Use of Funds 

Source of Funds
Parties	Minimum Raise- $300,000	Maximum Raise- $1,500,000
A Class Shareholders1	$1,500,000	$1,500,000
B Class Shareholders2	$300,000	$1,500,000
Property Purchase Finance3	$1,700,000	$500,000
Other Finance4	$3,122,609	$3,122,609
Total	$6,622,609	$6,622,609

1A Class Shareholders’ capital contribution to be paid by sale of the property at 218 Manukau Road, Epsom to Eden 218 for $3,500,000 + GST (Purchase Price).  $1,500,000 of the Purchase Price will be attributed to payment for 600 A Shares.

2 B Class Shareholders’ capital contribution will be used to fund part of the Purchase Price.

3 The balance of the Purchase Price will be funded from third party finance.

4 The remaining costs of the project will be externally funded by institutional lenders and guaranteed by the A Class Shareholders. Eden 218 is in discussion with lenders such as Kiwibank Limited and expects that the loan facilities to be available before commencement of construction early next year.

Use of Funds
Cost Breakdown	Amount
Land Acquisition	$3,500,000
Construction Costs	$2,342,609
RC & BC Application	$168,000
Subdivision Costs	$534,000
Legal & Others	$18,000
Crowdfunding Platform Fee	$60,000
Total	$6,622,609

(f) Exit Strategy

Eden 218 is aiming to complete the subdivision and all building construction work around 12 months from the start of the construction in early 2021. It is estimated that the earthworks will be commencing at the beginning of next year and with a completion estimated at the beginning of 2022.

Pre-sales started in October 2020.  We are aiming to sell and settle all units right after completion of construction and subdivision.

Eden 218 will be wound up once the development has been completed.

 

(3) Investment Returns

Investment returns will be made as follows once all properties in the development has been sold and settled. Please refer to the Constitution and Shareholders’ Agreement for more details on the investment returns.

Capital: A Shareholders and B Shareholders will receive capital repayment by capital return before the below three tranches of dividends are paid.

Dividends: Dividends, subject to the above capital return, will be paid to shareholders in the following priority once all properties in the development have been sold and settled:

Dividends	Recipients
First Tranche Dividends Amount equivalent to 15% of B Shareholders’ capital contribution	B Class Shareholders only
Second Tranche Dividends 15% of the distributable profits after deduction of the first tranche distribution	B Class Shareholders only
Third Tranche Dividends Remaining distributable profits after deduction of the first and second tranche distributions	A Class Shareholders only

 

(4) People

The Team

Peter Luo, Director & COO 

Founding partner of Eden Reits, CSO of Relab.co.nz, GM of Zagga Asia division, executive director of Stonewood Homes-North Auckland, a member of NZCBIA and the Master Builders Association. 15 years’ experience in building, real estate investment and property development. He specialises in project strategic planning, project funding planning and development management. Peter has a solid foundation and rich experience in real estate investment, property development and construction in New Zealand.

Xinyu Wang, Director & CEO 

Xinyu Wang is the founding partner of Eden Reits and Eden Ventures. After graduating from Peking University Xinyu joined Procter and Gamble as a management trainee, and spent 9 years there. Xinyu sharpened his management skills in P&G and also built up his core values there. Then he joined Google China as the GM of Northern China where Xinyu learnt how innovation and the internet works. After Google was pushed out of China, Xinyu joined one of the leading Chinese Venture Capital, Meridian Capital as partner and started his investment career. After 40 years living in China, Xinyu decided to move to New Zealand and continue his career of asset management. He set up Eden Ventures jointly with the Icehouse and invested into over 10 Kiwi high tech startups, mainly focusing on property tech and FinTech, for example, Relab, Squirrel and Nectar. Xinyu is trying to leverage property big data and insights to better serve property development. He is also trying to leverage mortgage big data to better design and sell houses. Xinyu also holds MBA and master of international finance from Fordham University.

Jo Chen, Director & CFO 

Joanne Chen is the founding partner of Eden REITs. She grew up in Chengdu, China and moved to New Zealand in 2001. After Joanne obtained a bachelor and postgraduate diploma in Finance, she studied and became a UK Actuary, while she was working in the financial services sector – general insurance, life insurance and investment over 8 years.

In 2013, Joanne joined Squirrel as a key member, leading its Chinese Team. Squirrel is founded by John Bolton former General Manager, Products at ANZ. Squirrel is the biggest mortgage broker in Auckland and helps first homebuyers and investors settle about $100 million to $120 million every month.

Joanne Chen was the first Chinese cover story in NZ Property Investor Magazine in 2015 and she has had a column in Entrepreneur section of M2 Woman Magazine, which is one of the few NZ magazines to target upper-class woman’s lifestyle.

 

(5) Construction Contract & Timeline

Eden 218 will sign a fixed price and fixed term contract with the main contractor, with the main contractor to provide Master Build Guarantee. Auckland Construction Group (www.nzacg.co.nz) has tendered to be the head contractor and the parties are negotiating the term of the tender.  It is estimated that the earthworks will be commencing at the beginning of next year and with a completion estimated at the beginning of 2022.

 

(6) Shares &Shareholders

(a) Share structure

Eden 218 will have two classes of Shares; A Shares and B Shares.  Currently, Eden Development No.1 LP holds all A Shares in Eden 218. Within 15 working days of successful crowdfunding and, subject to compliance with relevant laws and requirements of the Collinson Crowdfunding platform, B Shares will be issued to investors under this offer.

(b) Rights of A Shares and BShares

A Shares are management shares with voting rights and all other rights conferred to shareholders under the Companies Act and company Constitution. A Shares confer on the holder rights to dividends as set out in Section 4 “Investment Returns” above, rights to share in the surplus assets of the company and other distributions (if any).

B Shares are voting shares and with rights to dividends as set out in Section 4 above, rights to share in the distribution of the surplus assets of the company and other distributions (if any).

Share Capital (if Minimum Investment Target is achieved)

Eden 218 Development Limited		Pre Offer		Post Offer
Shareholders	Share Class	No of Shares	% of Shares	No of Shares	% of Shares
Eden Development No.1 LP	A	600	100%	600	95.24%
Shares issued under the offer	B	–	–	30	4.76%
Total	–	600	100%	630	100.00%

Share Capital (if Maximum Investment Target is achieved)

Eden 218 Development Limited		Pre Offer		Post Offer
Shareholders	Share Class	No of Shares	% of Shares	No of Shares	% of Shares
Eden Development No.1 LP	A	600	100% –	600	80%
Shares issued under the offer	B	–	–	150	20%
Total	–	600	100%	750	100.00%

The B Shares will be issued within 15 working days of the successful crowdfunding offer, subject to compliance with relevant laws and requirements of the Collinson Crowdfunding platform.

(c) Future capital raisingplans

Eden 218 has no further capital raisingplans. As noted above, Eden 218 will be wound up once the development has been completed and all funds and surplus assets have been returned to shareholders.

(d) Shareregister

Eden 218 will engage Gilligan Sheppard to manage the share register and related matters.

 

(7) Key attributes of the business 

• Strong Team: A professional team with sound knowledge and a deep understanding of the real estate and property development industry. Strong capability to manage and deliver the project on time on budget. That team will be supported by experienced consultants:
• X Studio Architects (www.xstudio.co.nz) completed the building plans for the development.
• Chester Consultants (www.chester.co.nz) completed the survey plan and fire design.
• Landworks Consulting is the Civil Engineer.
• SOLA Landscape Architects (www.sola.net.nz) completed the landscaping design.
• MEC Engineering Consultants (www.mec.net.nz) completed the structure plan.
• Auckland Construction Group (www.nzacg) has tendered as head contractor, and the parties are negotiating the term of the tender.
• Premium Location: Situated at the heart of Epsom, the project has excellent public transport links (Newmarket train station (1.6km walk), various bus services and stops (https://at.govt.nz/media/1976850/nnc-map-and-legend-100518.pdf) and easy motorway access (St Marks Road on-ramp, Gillies Avenue on and off-ramps, Greenlane on and off-ramps), but also boasting the tranquility of the magnificent Cornwall Park at the top of the street. The popular LIDO cinema is just a short stroll away as is the delicious FARO food market. The development is situated in zone for prestigious Auckland Grammar & Epsom Girls Grammar, as well as being very close to many of Auckland’s elite private schools. The Newmarket shopping and entertainment precinct is also nearby with the new mall featuring Top Branding and Cinema complex.
• The Project:  Each well-designed 136 – 140m2 – inclusive of the ground floor commercial premises) duplex house of Unit 1-4 offers 2 double bedrooms with 2 bathrooms (1 ensuite) and a balcony.  The ground floor is specially designed for commercial purpose.

Unit 5 (4 bedrooms with 3 bathrooms (1 ensuite) + Garage) and Unit 6  (3 bedrooms with 2 bathrooms + Garage), are 2 multi-level homes provide a spacious open plan living room with a high quality kitchen featuring high end appliances, all interior design by highly regarded designer.

Each property will be offered with a Freehold Title.  It supplies a good opportunity for both investment and living.

• Experienced Developer:  Peter Luo and his associated companies have been rooted in Auckland for decades and have completed many developments, subdivisions, terrace/duplex houses. Peter has lived in New Zealand for 20 years, and has over 15 years’ experience in the New Zealand building industry as a Manager/Director in property investment, development and delivery. He is also a Registered Master Builder and a member of the New Zealand Chinese Building Industry Association (NZCBIA). Their vast experience in the residential niche market extends across Auckland. We believe that a quality-built development together with strong agency branding will help ensure the high interest and good prices for the properties.

Snapshot of recent comparable projects:

Completed projects

• Marina Views, Gulf Harbour (39 lots subdivision and new builds)
• 59-61 Karaka St, Takapuna (3 stages, 18 lots subdivision and new builds)
• 29 Sydney St, Takapuna (3 lots subdivision and new builds)
• 30-32 Francis St, Hauraki (7 lots subdivision and new builds)

Under construction 

• 208 Lake Road, Northcote (7 lots subdivision and new builds)
• 11-13 Oteha Valley Rd, Albany (10 lots subdivision and new builds)
• 23 Frater-16 Saltburn, Milford (9 lots subdivision and new builds)
• 2 Stokes Rd, Mt Eden (5 lots subdivision and new builds)
• Super Lot 2006 Milldale, Silverdale (12 lots subdivision and new builds)

Upcoming projects

• 839 Manukau Rd, Epsom (9 lots subdivision and new builds)
• 2 Cardinal Pl, Glendowie (7 lots subdivision and new builds)

Current Market (accurate as at October 2020 only) 

We note that market conditions may change during the term of the investment.

• Low Threshold: An opportunity for investor to participate in propertydevelopment project paying a high return (but subject to risks – see below) with a relatively low investment amount (as little as $50,000).

 

(8) Risks

We have highlighted in this IM what we think are the strengths of our business, the development and this offer. However, there are certain risks that are inherent in running a business and in investing. We have listed risk factors below that may affect Eden 218’s ability to make distributions to the shareholders. There may be other relevant risks that we have not described below. We will try to manage those risks and to minimise their impact should they arise but that does not mean that risks will not arise or have an impact on your returns.Therefore, the risk management strategies we have noted are not guaranteed to be effective in all cases.

Risk	Risk Managment
Construction & Development Risk Construction and property development risks include: Delays due to weather conditions and other factors including Covid-19 related lockdowns and restrictions, water & power shortages. Subcontractors fail to perform their services to required standard or on time. Unexpected ground conditions or other factors that increase costs beyond those projected. Shortages or increases in costs of labour and materials.	Experienced professional team: The team have decades of experience in property development, construction management, financial market and investment, real estate and marketing industries. We are professional and are disciplined. Please refer to sections 5 “People” and 8 “Keys Attributes of the business” above.Fixed price: All major variables are going to be fixed prior to commencement the construction. E.g., Eden 218 will enter into a fixed price contract with the head contractor. The appointment of head contractor is yet to be finalised and the terms of the fixed price contract are subject to negotiation.
Market Fluctuation Risk The property market can be volatile and unpredictable caused by: Local economy variation New laws and regulations Growth rates of underlying population Other market variations, e.g. interest rate	Product Strategy: Medium density development within the affordable price range in a prime location is our orientation.
Unforeseen Loss or damage caused by: Fire Flood Earthquake Natural Disaster	Contractor’s All Risks Insurance [CAR]: principally covers damage to property, fire and water damage are the most common, and also covers liability for third party claims for injury and death or damage to third party property. Public Liability Insurance: covers off all damage to property, e.g. cars parks adjacent to the site on public roads, adjacent buildings, or inadvertently damaging public utilities

 

(9) Related partydisclosures

Peter Luo, Xinyu Wang, and Jo Chen (personally or through their companies/trusts)are Limited Partners of Eden Development No. 1 LP which in turn owns all A Shares in Eden 218.

Eden Development No. 1 LP owns the property at 218 Manukau Road, Epsom. Eden 218 will purchase the property from Eden Development No.1 LP at the price of $3,500,000 + GST within 15 working days of the successful crowdfunding offer, subject to B Shares having been issued to the relevant investors.  See Section 4(e) above on how the property purchase price is funded.

Peter Luo holds (through his company) 2.63% of the shares in Collinson CFIP Ltd, which is the parent company of Collinson Crowdfunding Ltd.Peter is not a director of either company and has no involvement in the management of either company.

 

(10) Financial Information 

Financial Forecast

Notes to Financial Forecast:

The estimated market value for each unit is based on:

• Signed presale agreements (2 in total); and

	5	$ 1,798,000	$           179,800
	1	$ 1,753,220	$           175,322

• Market projections*.

Like all forecasts, this is based on a number of assumptions including in relation to future market conditions and does not guarantee a particular outcome. The forecast involves known and unknown risks, uncertainties and other factors that may cause actual results to be materially different from forecasted results.  We note that the projections are based on assumptions set out in this IM including in relation to the property market and other factors, which include:

• Project is completed on time;
• No major increase in construction cost;
• No adverse events.

*Projections are based on our own analysis of general market trends and are not based on valuation from a registered valuer.  Our analysis is based on recent sale comparison taking into account several factors including the home size, lot size, location, home features, building quality and proximity to amenities.  Our market projections do not take into account other macro-economic factors such as interest rates and overall economic growth.

Balance Sheet

(11) Important information about the offer 

The offer will only be accepted via Collinson Crowdfunding’s website. More information about the offer and Eden 218 will be disclosed and updated via the Collinson Crowdfunding website from time to time.

The offer does not constitute, and is not intended to be, an offer in any places or to any persons outside of New Zealand where such an offer is not authorised or is illegal. Anyone receiving this offer outside of New Zealand must ensure that they fully comply with all applicable laws in their own jurisdiction before accepting an offer. Without limiting the previous statements, Eden 218 and Collinson Crowdfunding reserve the right to decline any acceptance or notice of intention to make an offer from a person outside of New Zealand.

 

(12) Warning Statement for crowd funding investors

• Equity crowd funding is risky.
• Issuers using this facility include new or rapidly growing ventures. Investment in these types of businesses is very speculative and carries high risks.
• You may lose your entire investment, and must be in a position to bear this risk without undue hardship.
• New Zealand law normally requires people who offer financial products to give information to investors before they invest. This requires those offering financial products to have disclosed information that is important for investors to make an informed decision.
• The usual rules do not apply to offers by issuers using this facility. As a result, you may not be given all the information usually required. You will also have fewer other legal protections for this investment.
• Ask questions, read all information given carefully, and seek independent financial advice before committing yourself.