ACT-S Capital Fund

The ACT-S Capital Fund presents an investment opportunity focused on Australian property development that align with Environmental, Social, and Governance (ESG) principles. The Fund aims to deliver a target return of 11% per annum after fees and expenses, following at least a three-year investment term.

Leveraging over 15 years of expertise in sustainable building practices, the Fund's strategy centers on property development projects that not only align with ESG considerations but also enhance the overall value and revenue of the investment. Beyond development, the Fund diversifies its portfolio through passive income-generating real estate, listed REITs, and deposit products to manage cash flow and liquidity.

Investors seeking exposure to the Australian property market, competitive returns with a sustainability focus, and long-term capital growth potential may find the ACT-S Capital Fund compelling.

The core investment strategy of this Fund is to primarily invest in property development projects that take into account ESG considerations where it would be a benefit to the final revenue and value of the Fund. The Fund may also own some passive income generating real estate, listed REITs and deposit products for cash flow and liquidity purposes.

The Investment Manager is targeting a return to Investors of 11% pre-tax (after fees and expenses) per annum after the third year of the Fund based on a rolling 3-year average.

This is a target return only and is not a forecast or a guaranteed return. 

There is a Minimum Term of 3 years from the date of issue of an Investor’s Units before Investors can participate in any withdrawal offers made by the Responsible Entity.

Any subsequent issue of Units to an Investor will trigger a new Minimum Term for those Units before the Investor can request to withdraw from the Fund in respect of those Units (provided the Fund is liquid).

The Responsible Entity retains the discretion to allow Investors to participate in withdrawal offers prior to the end of their Minimum Term.

Overview

The core investment strategy of this Fund is to primarily invest in property development projects that take into account ESG considerations where it would be a benefit to the final revenue and value of the Fund.  The Fund’s unique sustainable advantage is that the Investment Manager’s personnel have devoted in aggregate over 15 years of time and research into sustainable building practices that lower construction costs, including in terms of labour, while improving the value proposition of the end/final product to a purchaser or renter.

The Fund is a development and construction scheme which will primarily invest in property development assets. The purchase of property development assets will be made via SPVs. The Fund may also invest in some passive income generating real estate, listed REITs and deposit products for cash flow and liquidity purposes. A description of the classes of assets the Fund may invest in is set out below.

It is critical to the Investment Manager that the focus on ESG does not detract from the financial returns of the property developments that are selected. While it is the Investment Manager’s belief and business practice that the ESG component of the Fund should be a benefit to the final revenue and value of the Fund, neither the Responsible Entity nor the Investment Manager have a predetermined view as to what, if any, environmental, social or ethical considerations should or will be taken into account in selecting, retaining or realising any assets of the Fund.

It is important for the Investment Manager to have options at its disposal in the same asset class when opportunities provide a more efficient capital allocation. As such the Fund, is mandated to invest into the following assets classes that may or may not focus on ESG:

• Property Developments (Residential and Commercial)
• High interest-bearing cash accounts
• Property (land and building acquisitions) – for future development or buy and sell or buy and hold strategies
• Listed REIT or unlisted diversified property funds/single asset sub funds
• Equity opportunities in property investment opportunities
• Infrastructure and government property investments associated with environmental or social investment, for example, solar farm assets on a property held by the Fund
• Social housing into properties associated with NDIS and/or other social housing investment options.

All investments will be in Australian assets.

Portfolio composition and updates

As at the date of this PDS, the Fund has no investments.

The Investment Manager expects to publish regular portfolio and investment updates on a 6 monthly basis to keep Investors and prospective Investors informed about the Fund’s portfolio of direct and non-direct property assets which will be made available on the Responsible Entity’s website at www.vascofm.com and the Investment Manager’s website at www.actsecurities.com.au or on request from the Investment Manager.

Investment Selection Criteria

The Investment Manager has an investment process that is rigorous and tested. The Investment Manager employs a structured process in selecting investments. Standard checklists and due diligence consultants and questionnaires are used to support investment decisions and promote consistency of analysis. The Investment Manager’s management team (see Section 7.1 of PDS) form the Fund’s investment committee along with three external team members. This team are chiefly responsible for the identification, feasibility, and organisation of all investment opportunities. They are also primarily responsible for the due diligence process, from the overall purchase, management of the investment through to exit. This serves as a good business practice for an investment manager like ACT-S as it is important for the integrity in this process. 

In relation to development property investments specifically, the Investment Manager will provide itself with as much relevant information as possible and adopt the intended stages of the investment process for the prospective property development assets of the Fund as set out below. However, it is important to note that it is impossible to know for certain every variable that comes with developing on a specific development site. This translates to risk. The Fund must provide a return that is commensurable to the risk. 

1. Identification 
During this first stage ACT-S will be looking for development sites through any means necessary. The pipeline of deals is vital to the initial and ongoing success of the Fund. The use of buyer’s agents, local and national connections, and normal means of identification, greenfield sites will be funnelled in so that ACT-S can determine the sites viability in stage 2.

2. Preliminary assessment 
Once proposed development sites are found they then undergo preliminary assessment. This process considers ESG considerations (see Section 2.5). It also includes an overview of zoning parameters, indicative valuation, internal contract review, preliminary quantity surveyors report, basic feasibility, and other methods to determine the highest and best use of the site.

3. Selection 
If, following stage 2 a development site meets initial applicable selection criteria, the Responsible Entity will be informed of potential site acquisition and negotiations will commence. 

4. Due diligence period 
During this due diligence period a valuation of the development site will take place along with quantity surveyors reports if the development site has a development approval. If the property is to be sold subject to approval, then all arrangements are made to submit the development approval in a timely manner (after the purchase). Any relevant ESG considerations (see Section 2.5) are also taken into account in greater depth. Survey reports and on-site inspections will also occur.

5. Purchase 
Purchase of the development site will take place as long as all conditions have been met in the contract of sale and requirements have been adhered to by the Fund and the Responsible Entity signs off on the purchase. 

6. Implement Investment Strategy 
This is where the strategy is implemented for the specific development site whereby ACT-S project manages the design, development and execution of the specific investment. 

This may include but is not limited to, statutory development applications for approval, liaising with industry consultants / professionals and physical construction of either commercial or residential projects. The delivery timeframe may be impacted by elements such as statutory approval process, availability of labour and  materials, other industry influences and other relevant factors.

7. Sales / Lease Retain Strategy 
At this stage, the completed development site will be either sold or retained.

Depending on the investment strategy and market conditions, the completed development site will either be sold to maximise uplift in asset value or retained/leased for maximum cashflow stream to the Fund. Depending on the relevant circumstances, the process may be altered to include or exclude steps not listed above. In such situations other propositions not listed above may be considered. ACT-S will report to Investors bi-annually on the status of each development site.

For the purposes of this PDS, ESG means Environmental, Social, and Governance, but can also be taken to include environmental, social or ethical considerations expressed to be considerations that may be taken into account by the Investment Manager in this PDS. 

The Responsible Entity does not, in the context of making decisions relating to the Fund, take into account labour standards or environmental, social or ethical considerations, except to the extent that the Responsible Entity considers these issues have the potential to materially impact on the merits of its decisions in relation to the Fund. However, the Responsible Entity does retain ultimate responsibility for the investment decisions of the Investment Manager. The Responsible Entity relies upon selection methodology and the skills and expertise of the Investment Manager, who will take into account environmental, social or ethical considerations as described in this PDS, including below. This means that if the sustainability or value of the Fund is adversely affected due to unacceptable environmental, social or ethical factors, the Responsible Entity may choose not to invest further or to dispose of the investment.

The Investment Manager does not have a predetermined view as to what, if any, environmental, social or ethical considerations should or will be taken into account when selecting or retaining development properties. It is important for the Investment Manager to have options at its disposal in the same asset class when opportunities provide a more efficient capital allocation. As such the Fund, is also mandated to invest into assets classes that may or may not have a focus on ESG.

However, for transparency, the environmental, social or ethical considerations the Investment Manager may consider include but are not limited to the following: 

• Clean air quality
• Light quality
• Acoustic comfort
• Exposure to toxins
• Carbon emissions
• Energy use
• Energy source
• Water use
• Supply chain practises
• Community engagement

Similarly, the Investment Manager does not have a predetermined view as to how or to what extent any environmental, social or ethical considerations will be taken into account (i.e. it has no specific methodology, positive or negative screening or weighting system and no timeline for monitoring or reviewing such considerations), other than that it intends to take them into account on a case-by-case basis to the extent that they are likely to financially affect the investment being considered.