PIAA 5 Star Ratings System

Current Situation:

PIAA Subscribers and the general community have been at the mercy of poor investment analysis, and, lack of access to free and low cost resources due to lack of appropriate education and qualified advisors.

Property spruikers and other unscrupulous operators have been able to charge enormous sums of money to provide �education� which in many cases has been a front for them to sell inflated property in which they also have a vested interest.

What investors need is education about:

• What information is crucial to assess an investment property
• How to get this information
• How to find and assess providers of this information
• How to understand the analysis of information to assess the quality of a potential investment, for its likely cash flow and capital growth returns over time.

From this information an investor can seek professional advice to assess their risk profile and appreciate the practicality of owning different investments.

PIAA 5 Star Rating System

To assist subscribers PIAA has developed a comprehensive system of information assessment called the �PIAA 5 Star Rating System� (This information is called due diligence). It is designed to enable investors to readily understand the quantity and quality of information provided by the developer for them to assess a potential property investment.

Developers with Rated Developments can display their trademarked PIAA 5 Star Rating Logo for investors to immediately appreciate their commitment to transparency, good industry practice and support of wise investment decisions.

Developers of residential, holiday/lifestyle, commercial, industrial or retail investments have shown interest in having developments rated by PIAA.

Developments are not rated for their future potential, this requires the analysis of a skilled, experienced and qualified professional or investor. Rather they are assessed for the quality of information provided.

For example, in several states of Australia there have been scandals involving over inflated valuations being provided for properties with a lower market value. Henry Kaye and some Queensland developments have demonstrated this. PIAA seeks to avoid this issue by appointing a panel of accredited valuers. These members will be of standing in their profession and agree to abide by the PIAA Code of Conduct providing you with confidence in your valuation information.

Secondly, several legislated building standards are below investor expectations. For example the requirements for noise insulation between apartments in multi unit complexes are unacceptable to many residents. Rated developments will provide investors with an opportunity to assess some of these types of issues. Clearly an investment unit with good sound insulation means a tenant is more likely to stay, providing better returns on the investment.

The 5 Star Rating Process

PIAA has appointed noted independent assessors to collect, assess, and collate the identified information for investors. These individuals have many years of industry experience as professionals within the property development industry.

The information is assessed using a proprietary PIAA formula. This formula scores the range of information and weights it according to its significance in providing information to investors about the rated property.

The resulting rating is reviewed by PIAA management before being posted on the PIAA website and published in the PIAA newsletter.

PIAA expects this system to become widely appreciated and favoured by investors. Consequently we have protected the Five Star Rating Logos with Trade Marks. This provides PIAA with the legal control should it be necessary to move against an unscrupulous developer.

What ratings mean

One Star: An investment with a PIAA 1 Star Rating provides the minimum basic requirements for an investor to reasonably assess the investment for suitability.

Typically this would include:

• The development location, locality details and amenities
• Price list information conforming to PIAA standards
• Specifications of fixtures and fittings with brand name and model numbers
• Artistic impressions
• Building plans
• Floor plans
• Cash flow and ROI analysis
• Typical valuation from PIAA approved panel valuer

Five Star: An investment with a PIAA 5 Star Rating indicates an investment that has provided a comprehensive set of information, allowing the investors to undertake all the due diligence required to make an informed investment decision.

This would include the above information plus:

• Full Development Application information
• Construction Certificate
• Environmentally Sustainable Criteria.
• Profiles of Builder, Developer and Architect with history of results on other developments (Capital Growth and Cash Flow returns)
• Full valuation report from PIAA panel valuer
• Depreciation Schedules
• Typical unit valuations
• Marketing documentation
• Sales Contract � assessed by our legal representative that the investor�s interests are balanced with the developer�s.
• Length of Service with PIAA. Minimum of 5 years of Associate Membership and supplying rated investments

Note that because of the quantity of information an overview of documents will be available on the web site. Kits of this documentation are available via post for a copying and handling fee.

Assessment Criteria

The Assessment criteria include:

• All formal documentation submitted to Councils and Statutory Authorities
• Profiles of the developer, builder and architect.
• Marketing materials
• Valuations from PIAA approved valuers
• Environmentally sustainable design features
• Discounts for PIAA subscribers, and,
• Length of relationship with PIAA.

At this stage no development can receive 5 stars as one of the criteria is that the developer has had a relationship with PIAA for more than 5 years.

Summary:

We believe this level of commitment from developers and investors will provide benefits to the investment community.

• Education always drives increased professionalism. Better educated and informed investors are less likely to be seduced by unscrupulous operators.
• Investors and developers developing a common language will enhance communication and result in more appropriate and better quality investments
• Developers will be able to access investors during periods of crucial cash flow by offering discounts to offset the perceived risks of buying off the plan.
• Investment professionals will become better educated and informed providing more regulation in a highly unregulated area of asset investment.