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Arkus PDS
What this means and how GPS manages the risk The Fund’s portfolio will spread across a range of borrowers and asset securities within the residential and non-residential property market, with exposure to metro and non-metro locations throughout South East Queensland. GPS engages independent, appropriately qualified and experienced valuers to conduct valuations of the secured property. GPS also factors in a contingency amount into the amount to be lent by the Fund and generally lends up to a maximum of 70% of the value of the secured property, which provides a buffer in the event that property prices fall or the valuation is overstated. GPS minimises counterparty default by transacting with multiple counterparties and only with authorised counterparties. As the Fund is a non-liquid scheme, delays may occur in converting investments into cash. This may affect Distributions and/or redemptions to Investors. GPS manages this risk by closely managing the mix of assets and liabilities held by the Fund. GPS endeavours to act always in the best interest of Investors and communicates regularly with Investors to minimise adverse changes to Investors brought about by changes of this nature.
Risk Feature Description
Concentration risk
Concentration risk is where loans are highly concentrated to particular types of activities, locations or borrowers. Valuation risk is the risk that the valuation of secured property obtained by GPS is not reflective of current market property values. If the valuation is overstated, the property value at time of sale may not fully cover the amount borrowed. Valuations, both on an ‘as is’ and ‘as if complete’ basis are fundamental to determining how much the Fund may lend. The risk of counterparties (i.e. brokers, custodians and mortgage service providers) failing to perform as contracted. Liquidity risk represents the risk that the Fund may not have sufficient cash flows to meet payments on a timely basis. This is the risk that the Fund could be terminated, the fees and costs could change, GPS could be replaced as the Responsible Entity or key personnel could change. This is the risk that a change in domestic or international laws or regulations, including taxation, may have an adverse impact on the Fund. GPS cannot predict the outcome of any of these risks but they may negatively impact the operation, investment strategy and performance of the Fund.
Valuation risk
Counterparty default risk
Liquidity risk
Fund risk
Regulatory risk
Regulatory risk is managed by GPS by regularly and closely reviewing changes in the law.
Note 5 - ASIC Benchmarks & Disclosure Principles
ASIC has issued Regulatory Guide 45 Mortgage Schemes: improving disclosure for retail Investors (“RG45”) setting out eight benchmarks (“the Benchmarks”) and eight disclosure principles for unlisted mortgage schemes to address in a PDS. The Benchmarks and disclosure principles
identify a number of financial measures and business practices to help Investors assess the potential risks and rewards being offered prior to making their investment. The Fund is an unlisted mortgage scheme, as more than 50% of its non- cash assets are invested in mortgage assets.
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