INFORMATION MEMORANDUM

Australian
Farmlands
Funds
JUNE 2020

TRUSTEE KILTER INVESTMENTS PTY LTD ACN 152 558 113, AFS LICENCE NUMBER 414142
INVESTMENT MANAGER KILTER PTY LTD ACN 111 305 349
Contents

1 Investment opportunity 5

2 Introducing the Investment Manager 7

3 The Funds’ summary - key features 14

4 Why Australian farmland? 16

5 Why Australian water? 24

6 The Funds’ impact 32

7 Investment and management strategy 36

8 Financial returns 42

9 Historical Kilter Rural returns 44

10 The Funds’ structure and governance 46

11 Key risks 50

12 Details of the Offer 53

13 Fees and costs 56

14 Taxation 57

15 Additional information 59

16 Glossary 64

17 Instructions on how to invest 65

This Information Memorandum is dated 30 June 2020. Any update to this

Information Memorandum in connection with any invitation to a Wholesale Investor
to apply for units in the Fund will be made available at www.kilterrural.com.

INFORMATION MEMORANDUM  -  AUSTRALIAN FARMLANDS FUNDS  -  JUNE 2020 1

Important information
The Funds
This Information Memorandum (IM) is dated 30 June 2020 and
relates to the invitation to apply for units (Offer) in an investment
vehicle comprising the Australian Farmlands Fund (ABN 42 131
895 780) and the Australian Farmlands Operating Fund (ABN 96
399 684 842), which operate together under a stapled unit trust
structure (the Funds). Refer also Section 14.
Kilter Investments Pty Ltd (ACN 152 558 113, AFS licence
number 414142) (Trustee) is the trustee of the Funds.
The Trustee has appointed Kilter Pty Ltd (ACN 111 305 349,
Kilter Rural) to manage the Funds’ assets.
The original Information Memorandum for the Funds was
dated and issued 13 March 2019, and is superseded
by this Information Memorandum dated 30 June 2020.
No person is authorised to provide any information or to make
any representation in connection with the Funds or the issue
of units, which is not contained in this IM.
Wholesale Investors only
The regulated fundraising (product disclosure statement)
requirements of the Corporations Act do not apply to this
Offer. The invitation to invest under this IM can only be made to
recipients who qualify as ‘wholesale clients’ under Section 761G
of the Corporations Act or as ‘sophisticated investors’ under
Section 761GA of the Corporations Act (refer to the definitions
of ‘Wholesale Investor’ and ‘Sophisticated Investor’ in the
glossary, Section 16).
Each recipient of this IM represents and warrants to the Trustee
that they are, and at all times during the term of the Funds will be,
a ‘wholesale client’ as that term is defined in the Corporations
Act. This IM is provided to each potential Investor on the
condition that it is strictly confidential and is solely for the use
of the potential Investor and its advisers. It must not be provided
to any other party without the written consent of the Trustee,
which may be withheld in its absolute discretion.
This invitation to invest is available to persons receiving the IM
within Australia. None of the Trustee, its directors, employees,
members, associates or related entities, or any other person
related to the Funds, represent that this IM may be lawfully
offered, in compliance with any applicable legislation or other
requirements in any other jurisdiction, or pursuant to an
exemption available under another jurisdiction. Nor do any
of them assume any responsibility for facilitating any such
distribution or offering.
No liability
This IM has been prepared to the best of the knowledge and belief
of the Trustee. The IM is comprised of statements of intent and
opinion, many of which may or may not be realised or be accurate.
The Trustee believes the information in this IM, including statements
of intent and opinion, are based on reasonable assumptions.
However, to the maximum extent permitted by law, none of the
Trustee, its directors, employees, members, associates or related
entities, or any other person related to the Trustee represent
2
or warrant the accuracy or completeness of this IM, or any
information contained in it, and no responsibility or liability
will be accepted by the Trustee, nor its directors, members,
associates or related entities, nor any other person related to
the Trustee for any loss or damage, howsoever arising, which
results from reliance in whole or in part on such matters.
The recipient agrees that it shall not sue nor hold any of the
Trustee, its directors, employees, members, associates or
related entities, or any other person related to the Trustee
liable in any respect whether in contract, negligence, equity or
otherwise by reason of provision of the IM or any subsequent
information and expressly releases them from such claims.
Currency
Any reference to money (including dollars and $) in this
Information Memorandum is a reference to Australian currency.
Forward-looking statements and past performance
Statements in this IM are made as at the date of this IM.
Neither the delivery of this IM at any time nor the issue of any
units in the Funds shall, under any circumstances, create an
implication that the information contained in this IM is correct
as of any other time subsequent to such date. No
representation or warranty, express or implied, is made as to
the accuracy or completeness of any information contained
in this IM and other material that may be distributed with
or be made available in connection with this IM. Nothing
contained in this IM is, or shall be relied upon as, a promise
or representation as to the past or the future.
This IM does not purport to be complete, accurate or contain
all information which recipients may require to make an
informed assessment of whether to invest in the Funds. No
obligation is imposed upon the Trustee, its directors, employees,
members, associates or related entities, or any other person
related to the Trustee to advise a recipient of any information
of which any party becomes aware of or any change to, or
error in, the information contained in this IM.
This IM contains information on target returns and other
forward-looking statements which are not guarantees of
future performance. Actual returns may be materially different.
Similarly, any references to past performance in this IM are
not an indication of, or guarantee of, future performance.
Seek independent professional advice
This IM is not intended to be and does not constitute a
recommendation by the Trustee, Kilter Rural or any other
person associated with either of them in relation to an
investment in the Funds, nor does it constitute an offer to
invest in the Funds. It is important that you read the entire IM
before making any decision to invest in the Funds. Recipients
should note that this IM has not been prepared with the
objectives, financial situation or particular needs (including
financial and taxation considerations) of any individual person,
or class of persons, in mind. Before making an investment
decision, recipients should consider whether the investment
is appropriate to their needs, objectives and circumstances.
The Funds are subject to risks and an investment in the Funds
is only suitable for experienced investors with an awareness
of the nature and likely quantum of the risk factors set out in
Section 11. Recipients should independently verify the material
contained in this IM and must rely on their own enquiries and
seek professional advice (including financial, taxation and legal
advice) as to the wisdom, or otherwise, of an investment in the
Funds and as to the accuracy and completeness of this IM.
Investments in the Funds are not deposits nor liabilities of the
Trustee. The Funds are subject to investment risk, including
the possibility of delays in payments of distributions, if any,
or the complete loss of income or capital.
This IM must be read in conjunction with the Constitutions of
the Funds. Potential Investors should read the Constitutions
for further information regarding the rights and obligations of
Investors in the Funds and the rights and obligations of the
Trustee. If there are any inconsistencies between this IM and
the Constitutions, the Constitutions will prevail.
The defined terms used throughout this IM are set out in the
glossary in Section 16.

Investing has risks

This IM is comprised of statements of intent and opinion
and forward-looking statements. While in preparing the
information that comprises these statements the Trustee has
used all reasonable endeavours to ensure that at the time
prepared they are based on reasonable assumptions, they
may not be realised or be accurate.
Each of the Trustee, its related bodies and each of their
respective directors, officers and associates, do not
guarantee the performance or success of the Funds, the
achievement of target returns presented in this IM, the
payment of distributions to Investors, the repayment of
Investors’ application monies, the amount an Investor will
receive on redemption, or any income or capital return or
the taxation consequences of investing. An investment in the
Funds involves risks, which are summarised in Section 11.

Confidentiality
This IM is provided to each potential Investor on the
condition that it is strictly confidential and is solely for the
use of the potential Investor and its advisers. It must not be
provided to any other party without the written consent of
the Trustee, which may be withheld in its absolute discretion.

Other information
No person is authorised to give any information or make
any representation in connection with an investment in the
Funds, or the Offer, other than those prescribed in this IM.
Any information or representation made to you by a person
that is not contained in this IM cannot be relied upon as
having been authorised by the Trustee.

Updating this Information Memorandum

The Trustee has no obligation to update the information in this
IM. However, the Trustee may from time to time provide updated
information to Investors on its website at www.kilterrural.com
or as an addendum or as an update to this IM. Upon request
by Investors, the Trustee will provide a printed copy of that
updated information.

INFORMATION MEMORANDUM  -  AUSTRALIAN FARMLANDS FUNDS  -  JUNE 2020 3

 Dear Investor,
On behalf of Kilter Investments Pty Limited as Trustee, it is my pleasure to invite you to invest in the Australian
Farmlands Funds.
The Funds present an opportunity to invest in funds managed by Kilter Rural, one of Australia’s most
experienced agricultural asset managers in irrigation farmland regeneration, water and production sustaining
ecosystem protection. The Phase 1 capital raise was fully funded in October 2018, with investments in farmland
and water delivering a first crop of field tomatoes harvested in Autumn 2020.
Kilter Rural has an enviable record in the transformation of Australian farming landscapes and water markets to
deliver investors long-term financial returns with positive environmental and social impact.
Kilter Rural’s proprietary Future Farming Landscapes investment model is applied to acquire and manage
Fund assets to generate yields from high-value cropping rotations on irrigated farmland and optimise returns
from water use through on-farm crop production or through the sale of Water Allocations in a highly regulated
and sophisticated water market in the southern Murray-Darling Basin. The Funds also benefit from expected
long-term capital appreciation of farmland and Water Entitlements.
The case for investing in irrigated Australian farmland, water and environmental assets is compelling. Demand
for these precious resources continues to rise as growing global populations, climate change and unsustainable
land management practices place increasing pressure upon Earth’s scarce and finite natural assets.
Recent increases in per capita wealth across the middle classes of Asia is further driving demand for clean
and green food and fibre products produced in an environmentally sustainable manner.
Australia is well placed to capitalise upon these trends through recently signed free trade agreements with
key trading partners in this region.
Agriculture through modification of natural landscapes over time has contributed to the escalating issue
of global carbon emissions. Kilter Rural has tackled this challenge with proven experience regenerating
irrigated farming landscapes to mitigate risks from climate events and the provision of a net carbon sink.
An investment in the Australian Farmlands Funds supports implementation of regenerative farming systems
that deliver part of the solution to reducing long-term global carbon emissions.
Investors in the Australian Farmlands Funds will benefit from Kilter Rural’s 15 years of experience successfully
implementing farmland, water and ecosystems regeneration and expand the positive impact of this investment
model further across Australian farming landscapes.
Kilter Rural’s commitment to and leadership in the impact investment space has been recognised by the
Australian investment industry with the award of Impact Asset Manager of the Year in November 2019. If you
do decide to invest or add to your current unit holding, please submit your completed Application Form at your
earliest convenience to ensure you secure your opportunity to participate in the Australian Farmlands Funds.

Bob Welsh
Chair
Kilter Investments Pty Ltd

4
1 Investment opportunity
1.1 Overview of the Australian
Farmlands Funds
The Funds comprise two Australian unregistered, unlisted
unit trusts – the Australian Farmlands Fund and the
Australian Farmlands Operating Fund that are ‘stapled’
in a legal relationship (refer also Section 14.1).
The Funds represent an opportunity through which
sophisticated and wholesale investors can access an
agribusiness portfolio of irrigated farmland, water and
environmental assets in the southern Murray-Darling
Basin (sMDB). Financial returns are delivered through the
regeneration of underutilised irrigation farming operations
to deliver high-value organic and conventional crops,
sustained by ecosystem protection to deliver long-term
returns to investors.
As at 31 March 2020 the Funds have:
• $33.3 million in assets under management (AUM).
• Capital allocated with 40% to Water Entitlements
purchases, 34% to land and development and 26%
for working capital and undeployed cash.
• Delivered a performance, annualised since inception
(October 2018), of 3.2% to 31 March 2020.
• Five farms and more than 2500ML of Water Entitlements
purchased with land regeneration underway.
Investors will gain the benefit of Kilter Rural’s extensive
experience delivering impact through farmland, water and
ecosystem regeneration.
For 15 years Kilter Rural has deployed and refined its
investment strategy via a $400 million mandate for a
$25 billion institutional investor. The strategy has
outperformed in delivering financial returns with significant
and measurable environmental and social benefits.
A key feature of any Kilter Rural-managed landscape is
planning for and mitigating climate risk with farmland
providing a net carbon sink, which involves sequestering
more carbon than operations emit. In 2019, Kilter Rural
was awarded Impact Asset Manager of the Year at the
Asia Pacific Impact Investment Summit.
INFORMATION MEMORANDUM  -  AUSTRALIAN FARMLANDS FUNDS  -  JUNE 2020
The investment strategy encompasses the following features:
• Target underutilised farmland: Land use transition
presents opportunity for attractive entry value and the
ability to aggregate scaled areas of high-quality soils.
• Water security: Ownership of a portfolio of high
security Water Entitlements that operate only in regions
with secure water delivery.
• Regenerate and value add: Aggregate properties,
regenerate soils, import irrigation technology and
repurpose to a high-value cropping program buffered
by scaled ecosystem protection.
• Mitigate price risks: Remove exposure to commodity
price fluctuation by working through established offtake
agreements to service unmet demand for high value
conventional and organic produce.
• Mitigate industry and climatic risks: A geographic
and industry spread within the sMDB mitigates industry
and climatic risk.
• Monitor and report impact: Utilise the Accounting
for Nature framework to monitor, measure and report
annually on the trend in environmental condition of
natural capital (soil, vegetation, water, fauna) and
progress towards defined targets.
• Exit options: The Funds’ aggregation approach
makes for an attractive investment option to corporate
and institutional-grade investors and provides a variety
of exit strategies.
The Kilter Rural strategy for farmland regeneration has
proven across 15 years to moderate risks associated with
climate change and weather events. It produces high-value
agricultural commodities balanced by advances in soil and
ecosystem condition to deliver sustained yield increases
and improved long-term asset value.
In a Kilter Rural-managed landscape,
agricultural production and ecosystem
protection are inter-dependent
partners in delivering increased yields
and long-term investor value.
5
Kilter Rural has identified a $100 million pipeline of landscape
KEY INFORMATION
investments within the sMDB featuring excellent transport
infrastructure and access to a well-educated workforce.
Target funds Up to $300 million
Coupled with negligible sovereign risk issues, this provides
under management
an opportunity that is increasingly hard to find in other parts
(FUM)
of the world.
Kilter Rural has a demonstrable track-record in Target IRR 10%-12%
implementing rural asset investments.1 (net of fees and before tax)*
• 9.5% internal rate of return (IRR) annualised since
inception for current institutional farmland mandate.2 Term Up to 10 years from
when Phase 1 was fully
• 16.7% annualised return since inception (June 2014) subscribed in October 2018
for the Kilter Water Fund.3 (refer to Section 12.8)**
• 18.8% annualised return since inception (October 2015)
for The Murray-Darling Basin Balanced Water Fund.4 Key dates Phase 1 fully subscribed
October 2018. Funds received
by 31 December 2020 will
1.2 The Funds’ overview be deployed through the
acquisition of assets described
The Funds’ investment advantages include: as Phase 2 (refer to Section 8)
• Participation in a measurable impact investment. It is currently intended
• Capital preservation backed by real assets in that the close date for the
farmland and water. Funds (capital raise) will be
31 December 2021
• The benefits of low correlation to traditional
financial investments. Fees 1.5% (refer to Section 13)
• An asset manager and investment strategy with
* This target return is not a forecast of the Funds’ future performance.
a demonstrable track record. ** From establishment of the Funds, which occurred on 23 August 2018.
• Climatic risk mitigation through the application
of industry-leading irrigation technologies and
matching land use with land capability. Kilter Rural was awarded 2019 Impact
• Asset diversification through ownership Asset Manager of the Year at the Asia
of complimentary asset classes. Pacific Impact Investment Summit.
• Exposure to value creation through the investment
strategy, and
The continued global demand for sustainably sourced food
• A choice of exit strategies through a geographic and fibre combined with the scarcity of quality irrigable
and sector spread. farmland within a stable investment environment support
the compelling investment fundamentals of the Funds.

1 Past performance is not a reliable indicator of future performance.

2 Kilter Rural has managed a farmland and water portfolio since 2006.
3 To 31 March 2020.
4 To 31 March 2020.

6
2 Introducing the Investment Manager

2.1 Background
Founded in 2004, Kilter Pty Ltd (trading as Kilter Rural) is an innovative,
forward-thinking Australian based provider of rural asset investment and
management services.
Kilter Rural was formed in response to institutional demand for investment
in sustainable management of farmlands, water and ecosystems. In 2006
Kilter Rural attracted its first $250 million commitment to invest through its
proprietary model in the renewal of rural landscapes.
In December 2018 Regal Funds Management Pty Limited (Regal) acquired
a 50 per cent stake in Kilter Pty Ltd. Regal and Kilter Rural have aligned to
drive growth and jointly extend its ‘profit with impact’ investment approach
to Australian farmland and water. Regal brings expertise in financial markets,
assessing and delivering risk-adjusted returns and capital raising networks.
Regal is one of Australia’s leading investment managers, specialising in
alternative strategies. Since 2004 Regal has been trusted to invest on behalf
of a wide range of institutional investors and high net worth individuals.
Regal’s first fund, launched in 2004, has twice been named the Australian
Hedge Fund of the Year.
Regal has identified the benefits of investment in uncorrelated assets and has
recognised the potential of agricultural farmland and water as an asset class
that provides investment diversification and the potential for strong returns.

INFORMATION MEMORANDUM  -  AUSTRALIAN FARMLANDS FUNDS  -  JUNE 2020 7

2.2 Kilter Rural purpose
The Kilter Rural purpose is to profitably improve Australia’s
farmland, water and ecosystems at scale while delivering
Investors long-term, resilient, and uncorrelated, inflation-
protected returns.
Successful delivery against this purpose requires FUM at
scale. Scale enables a greater breadth and diversification of
farmland, water and ecosystem assets under management
and provides efficiencies in the transformation cost, resource
use and ecosystem benefits, all of which are vital in building
long-term value and returns to Investors.
2.3 Kilter Rural – history in
farmland, water, ecosystems
and communities
With more than $500 million in AUM as of 31 March 2020,
Kilter Rural has been the pre-eminent supplier of farmland,
water and ecosystem investment products in the sMDB for
more than a decade.
Kilter Rural knows irrigation farming and the needs of
irrigation businesses. Its team understands how water, when
combined with farmland management, drives farm business
performance and investment outcomes.
Kilter Rural’s model for farmland, water and ecosystem
renewal has been developed to service the overlapping
outcomes of returns for investor clients, ecosystem
protection and operational engagement of the local
communities in which it operates.
For more than a decade Kilter Rural has
been at the forefront in innovation
and deployment of new water products
that service irrigator needs and deliver
responsible returns to investors.
8
Our experience across 15 years regenerating more than
12,000 hectares (ha) of farmland, to include 5000ha of
highly resource-efficient irrigation technologies, provides
a fundamental basis of irrigated farmland development
knowledge. Such asset transformation increases yields, drives
operational profitability and boosts long-term capital growth.
Landscape transformation outcomes require active
participation in the development of rural economies and
communities. Kilter Rural partners with local staff and
contractors, to make positive local economic and social
impacts part of the long-term investment into any area.
2.4 Core values
Kilter Rural tackles its purpose through commitment
to the firm’s core values:
PRODUCTIVITY
• We strive for commercial
excellence in everything we do
LONGEVITY
• We deliver sound returns in the
short term but plan for returns
for generations
RELATIONSHIPS
• Kilter Rural people don’t just meet,
we build relationships – it’s a
fundamental part of what we do
2.5 The Kilter Rural
competitive advantage
• Environmental impact: Based on a lifetime vocation
in sustainable resource management on the part of its
founders, Kilter Rural is a market leader in collaborating
with scientific and industry bodies to measure and
quantify the change in the condition of underpinning
natural assets such as soil, water and vegetation.
Utilising the independent Accounting for Nature
framework, Kilter Rural will account for changes in
environmental condition over time and report to the
Trustee and Investors on how the investment model is
both profitably and ecologically improving Australian
agricultural landscapes. This core focus on the protection
and enhancement of natural ecosystems to support
farmland production and build investor returns is central
to the Kilter Rural management philosophy.
• Relationship strengths: Kilter Rural employs a
direct ‘face to face’ engagement approach, establishing
long-term relationships with key stakeholders.
• Experience: It directly manages more than 12,000ha
of farm and ecosystem landscape. This knowledge
informs innovation, maximises resource use efficiency
and delivers farmland regeneration for higher
production value.
• Landscape regeneration: Kilter Rural has
transformed more than 12,000ha of underutilised and/
or degraded landscapes into a combination of highly
resource-efficient irrigated farmland and biodiverse
low-input grazing systems.
INFORMATION MEMORANDUM  -  AUSTRALIAN FARMLANDS FUNDS  -  JUNE 2020
• Value capture: Through a joint venture arrangement
with Wedgetail Food and Fibre Pty Ltd (Wedgetail),
Kilter Rural fulfils more than $17 million of high-value
offtake agreements (OTAs) annually for both conventional
and organic related product. Wedgetail acts as the
marketing agent for Kilter Rural produce. Wedgetail’s
experience spans 30 years of senior level management
in the managing and marketing of fast-moving consumer
goods, brand strategy, vertical integration and large-scale
corporate agriculture.
• Product innovation: For more than a decade
Kilter Rural has been at the forefront in innovation
and deployment of new water market products that
provide irrigators with market hedging capability while
delivering consistent and responsible returns to Investors.
Kilter Rural has developed a detailed understanding
of the water regulatory system across Victoria, New
South Wales and South Australia. This knowledge has
informed the development of a bespoke set of legal
contracts aimed at reducing financial and impairment
risk to the Investor. This intellectual capital has proven
robust through hundreds of water transactions.
• Cyclical experience: Since 2006 Kilter Rural
has managed agricultural assets through a range of
historically extreme weather events and a variety of
market cycles. Its experienced team is practised at
pursuing market opportunities and successfully managing
through challenging conditions, including droughts,
floods, commodity/currency fluctuations, the Global
Financial Crisis (GFC) of 2008-09 and the COVID-19
crisis of 2020.
9
Table 1: Key Kilter Rural team members
Director, CEO and AFSL
Responsible Manager
CULLEN GUNN
Bendigo and Melbourne
Since the late 1980s Cullen
has dedicated his working
life to advancing sustainable
farmland, water and
ecosystem management
in Australia. Long-term
exposure to the investment
needs of Australian
landscapes prompted a desire
to attract institutional-scaled
investment in sustainably
managed landscapes.
He is a director of Accounting
for Nature, a not-for-profit
company with a vision to be
a recognised global leader
for measuring changes in the
health of the environment.
Cullen is a founding
director of Kilter Rural
and has been overseeing
the existing investment
portfolios since 2006.
10
Chair, Director, Chief
Investment Officer and
AFSL Responsible Manager
EUAN FRIDAY
Bendigo and Melbourne
Euan has more than 25 years’
experience in senior financial
and commercial roles. Prior
to joining Kilter Rural in 2008,
Euan spent 10 years working
in PricewaterhouseCoopers’
Corporate Finance practice in
Melbourne and Europe. This
was followed by seven years
with STA Travel where he held
the roles of chief financial
officer (CFO), director of
sales and managing director
for STA’s AUS/NZ business.
During this period STA Travel’s
annual turnover increased from
$180 million to $350 million.
At Kilter Rural, Euan has been
integral to the establishment of
the water business which today
manages assets across all major
classes of Water Entitlement
on issue in the sMDB. Today,
as CIO, Euan heads up Kilter
Rural’s investments team
focused on identifying and
securing new investment
opportunities for clients.
Non-Executive Director
BRENDAN O’CONNOR
Bendigo and Sydney
Brendan has more than
20 years of financial
services experience across
a diverse range of asset
classes with organisations
including KPMG, Westpac
and Challenger Limited.
Brendan is the CEO
of Regal, a specialist
alternatives investment
manager with offices in
Sydney and Singapore.
Immediately prior to joining
Regal in 2016, Brendan
spent more than 10 years
at Challenger, including
eight years as the CFO
of Challenger’s funds
management business.  office) and is an independent
Brendan holds a Bachelor
of Business, majoring in
accounting and finance,
from the University of
Technology, Sydney, is
a chartered accountant
and a graduate member
of the Australian Institute
of Company Directors.
Non-Executive Director
IAN GIBSON
Bendigo and Sydney
Ian has almost 25 years’
experience in financial
markets. For much of the
past 15 years Ian has acted
as a director, investment
adviser and consultant to
a range of financial groups
and organisations.
As well as being a director
of Kilter Pty Ltd, Ian is a
director of Regal, a director
of Attunga Capital Pty Ltd
(a hedge fund involved in
power markets), a director
of Renew Power Group Pty
Ltd (a renewable energy
business), an adviser to RPG
Management Pty Ltd (family
member of the investment
committee for Atrium
Investment Management
Pty Ltd (a multi-asset
fund manager).
Company Secretary,
Compliance, AFSL
Training Officer and AFSL
Responsible Manager
ANITA BUTTERS
Bendigo and Melbourne
Anita has 25 years’ exposure
to financial management and
governance in agricultural
and natural resource
management. Anita has been
working in Kilter Rural since
its inception in 2004, leading
implementation of quality
assurance, compliance and
governance processes.
Chief Financial Officer
SEAN WINDER
Bendigo
Sean’s working career
spans a range of industries
from Price Waterhouse to
listed mining and chemical
companies. At Morgan &
Banks/TMP he held a variety
of senior positions including
finance manager, company
secretary, operations director,
and state director for WA.
In 2003, Sean launched then
ran his own management
consulting firm specialising
in mergers and acquisition
advice to human services
businesses. For the next
14 years he delivered these
consulting services to a wide
variety of clients. In 2017 Sean
joined Kilter Rural as CFO.
Finance Manager
MOIRA PASQUALI
Bendigo
Moira has more than 15
years’ experience in senior
accounting roles. Moira has
worked across a range of
industries including media
and taxation, gathering
extensive knowledge and
experience Moira joined
Kilter Rural in March 2014.
She is responsible for the
day-to-day accounting
functions necessary for
accurate and timely reporting.
General Manager
Farmland & Ecosystems
MICHAEL NEVILLE
Bendigo
Michael has been working
within the agriculture
industry all his working
life and directly involved in
corporate agriculture since
1998. He graduated from
the AICD program in 2010
and from 2005 to 2015 he
was a director of Southern
Farming Systems, a non-profit
research organisation formed
to develop ways of making
farming more profitable
in areas with high rainfall.
Michael was recognised
as the National Farm Safe
Farmer of the Year when
working with the Warakirri
Agricultural Trusts.
Michael joined Kilter Rural
in January 2013 and focuses on
agricultural and environmental
system management. He is
also a director of Wedgetail
Food and Fibre Pty Ltd.

INFORMATION MEMORANDUM  -  AUSTRALIAN FARMLANDS FUNDS  -  JUNE 2020 11

Landscape and
Sustainability Analyst
DAVID HEISLERS
Bendigo
David has worked in a
range of natural resource
management (NRM) roles
for 30 years. His experience
ranged from salinity research
to broader NRM consulting
before joining Kilter Rural in
February 2008. In his time
with Kilter Rural his role has
involved the measurement
and reporting of sustainability
performance. A milestone
of his work has been the
development of environmental
assets accounts to measure
and track the condition and
trend of natural assets in a
farming context, a task that
involves close engagement
with the nation’s premier
natural resource scientists.
12
Manager Investments
and Partnerships
ANGUS INGRAM
Bendigo and Melbourne
Angus has 20 years’
experience across production
agriculture and agribusiness
within various livestock and
cropping sectors, including
several years with ANZ Bank
as an Agribusiness Manager.
Prior to joining Kilter Rural
in May 2018, Angus spent
three years developing and
overseeing four irrigated dairy
properties in Tasmania on
behalf of private investors.
Angus is focused on the
assessment, presentation
and ongoing oversight of new
investments that fit the Kilter
Rural investment philosophy.
Manager of Property and
Development
BRENDAN WATSON
Bendigo
Brendan joined Kilter Rural
in 2008 and has overseen
much of the property
aggregation and development
works. He has extensive
experience in implementing
multiple irrigation delivery
technologies, utilising
extensive networks across
private enterprise and
government to ensure project
delivery on time and on
budget to optimise returns
for investors.
Manager Water Business
Development
MATTHEW BRYANT
Bendigo
Matt joined Kilter in April
2018. He has a business
development background
combined with commercial
and technical experience
in both the water and
agricultural sectors. He has
had management oversight in
the operation of the Goldfields
Superpipe as well as for
water treatment and network
distribution of urban water
supplies. Matt has provided
business consultancy services
to multiple agricultural
industries, was CEO of
a health-related patient
transport organisation
and has been co-founder
of multiple successful
technology start-up
companies.
 With its core focus on
the protection and
enhancement of natural
ecosystems to support
farmland production and build
investor returns, Kilter Rural
can deliver an investment
offering of moderate to low
risk with reduced volatility.

INFORMATION MEMORANDUM  -  AUSTRALIAN FARMLANDS FUNDS  -  JUNE 2020 13

3 The Funds’ summary - key features
The key features of the opportunity are summarised in Table 2. The IM should be read in its entirety before deciding to invest.

Table 2: Key features of the Offer

FEATURE OVERVIEW

Investment assets Farmland, Water Entitlements, Water Allocations and associated agribusiness assets
within the sMDB.

Investment vehicle The Funds comprise the Australian Farmlands Fund and the Australian Farmlands
Operating Fund, which operate together under a stapled unit trust structure.

Trustee Kilter Investments Pty Ltd (ACN 152 558 113, AFSL 414142, Kilter Investments)

Investment Manager Kilter Pty Ltd (ACN 111 305 349), trading as Kilter Rural

Custodian Sandhurst Trustees Limited (ACN 004 030 737, AFSL 237906)

Funds’ auditor Morrows Audit Pty Ltd (ACN 626 582 232)

Valuation Farmland assets are independently valued annually by a valuer determined by the Trustee.
Water Entitlements are independently valued monthly by Marsden Jacob Associates
Pty Ltd (ACN 072 233 204), or such other valuer determined by the Trustee, using a variety
of information sources including the median price recorded in state water registers.

Target IRR An IRR of between 10% and 12% per annum is targeted (after fees, other than any performance
fees, and before tax). This is a target return and not a forecast of the Funds’ future performance.

Unit issue price The unit issue price for each month will be determined as the NAV per unit with the addition
of a 3% buy factor. Refer Section 12.2.

Minimum investment $100,000 and then in increments of $10,000 or as otherwise determined by the Trustee.
amount

Investment ratio Investors’ capital will be subscribed 90% in the Australian Farmlands Fund and 10%
between the Funds in the Australian Farmlands Operating Fund.

Capital close The Funds are ‘open funds‘ and do not have an upper limit on capital that may be raised, however
it is currently intended that the Funds will close for receipt of applications on 31 December 2021.

Capital deployment The Funds will prudently deploy available capital following its receipt whilst adhering
to the Funds’ strategy.

Term The Funds are open funds with a term of 10 years from when Phase 1 was fully subscribed
in October 2018. Refer Section 12.

Redemptions Investment in the Funds should be considered illiquid. However, the Trustee will consider
redemption requests in accordance with the terms outlined in Section 12.5.

14
 FEATURE OVERVIEW

Eligible investors Investors are limited to ‘wholesale’ and ‘sophisticated’ investors as those terms are defined
in the Corporations Act.

Distributions Any distributions will be paid annually by the end of the first month following the end of the
financial year.

Borrowings The Funds do not intend to use borrowings other than to meet short-term funding requirements
for working capital.

Management Fee Kilter Rural, as the manager, is entitled to receive a management fee of 1.15% per annum of the
NAV of the Funds’. This fee is paid monthly in arrears by the Funds.

Trustee Fee The Trustee is entitled to receive a trustee fee of 0.35% per annum of the NAV of the Funds’.
This fee is paid monthly in arrears by the Funds.

Grant Fee Kilter Rural, as the manager, is entitled to receive a fee of 10% of the value of all co-investment
grants and or natural capital, ecosystem service and environmental protection payments sourced
through collaborators, new and existing markets, government collaboration and including but
not limited to statutory authorities.

Performance Fee A performance fee will be payable by the Funds on the 10th anniversary of the Funds’
establishment upon the achievement of a hurdle rate calculated as 15% of pre-tax returns
(net of management fees and costs) above a performance hurdle of 8%. Kilter Rural, as the
manager, is entitled to receive half of this performance fee on the fifth anniversary of the Fund’s
establishment (assuming the Funds’ performance for the period exceeds the performance
hurdle). Subsequently the performance fee will be calculated subject to a ‘high water mark’.

Recoverable The Funds’ expenses are payable by the Funds. These include, but are not limited to,
expenses all administration, accounting and audit, valuation and custodial costs.

Taxation The intention is that the Australian Farmlands Fund will distribute any taxable income annually
such that it is taxed in the hands of Investors. It is intended that the Australian Farmlands
Operating Fund will be taxed as a trading entity (i.e. ’company’) and the Trustee will declare
dividends where considered appropriate. Such dividends may be franked to the extent that
franking credits are available. Refer Section 14.

Risks The Funds will be exposed to risks which could adversely impact on return of income or capital.
Refer Section 11.

SMSF and Self-managed super funds and complying superannuation funds are able to invest in the Funds,
superannuation funds subject to their own investment criteria.

INFORMATION MEMORANDUM  -  AUSTRALIAN FARMLANDS FUNDS  -  JUNE 2020 15

4 Why Australian farmland?

• Strong sector fundamentals • Low sovereign risk

• Farmland value trends • Competitive advantage
• Attractive return profile • Socio-economic drivers
• Internationally competitive

16
4.1 Strong sector fundamentals
Demand for Australian agricultural produce continues
to strengthen as high standards of quality and safety are
recognised, particularly within the growing middle-income
demographics of Asia.
The United Nation’s Food and Agricultural Organization
(FAO) has stated there will be an additional two billion
people on Earth by 2050. Based on current systems, farmers
will need a 50% increase in food production to meet the
expected 2030 demand alone.5 Globally, the fundamental
agricultural resources required for food and fibre production
face ever-increasing pressures and increased exposure
to climate change.
Quality arable farmland across the globe is becoming
increasingly scarce. Arable land per person declined by
52% from 1961 to 2015.6 While agricultural productivity
improved over that time, the rate of improvement is
now declining while population pressure continues to
build. Trends in annual crop yield gains have plateaued,
achieving slightly more than 1% since the 2000s.7
Figure 1: Arable hectares per person
0.4
0.35
0.3
0.25
0.2
0.15
0.1
0.05
0 5.2%
1961 2015
Utilising regenerative practices, a sustainable intensification
of agriculture is necessary to meet the increase in global
demand for food. Meeting this demand will depend upon the
development and uptake of progressive technologies that
lead to improved agricultural productivity.
In order to capture the expected agricultural export potential,
it has been estimated that Australian agriculture will require
up to $1 trillion in investment by 2050.8
5 The Future of Food and Agriculture, published by the Food and Agriculture Organization in 2017.
6 The World Bank, Databank.
7 The Future of Food and Agriculture: Trends and Challenges, published by The Food and Agriculture Organisation of the United Nations in 2016.
8 ANZ Greener Pasture Report, 2012.
9 Australian Farmland Values 2019, a Rural Bank Report 2020.
10 Australian Farmland Index 2019.
INFORMATION MEMORANDUM  -  AUSTRALIAN FARMLANDS FUNDS  -  JUNE 2020
4.2 Farmland value trends
The most comprehensive guide to trends in Australian
farmland values is Rural Bank’s Australian Farmland Values
Report, which accounts for 239,000 transactions across
23 years.
• The 20-year average to 2019 annual land value growth
across all Victorian farmland transactions was 6.6%.
Refer Figure 2.9
• Larger land parcels, most relevant to the Funds’ strategy
in northern Victorian and north-west Victoria, have
achieved a 9.3% and 7.6% 10 year compound annual
growth rate (CAGR) respectively.
• In New South Wales, where farm areas are typically larger
than Victoria, land parcels of 250ha-plus have achieved
a 10-year CAGR of 6.8%.
These trends confirm a strong demand for farmland
transactions where scale is obtainable, and irrigation is
available to hedge against climatic exposure.
In order to evaluate how these trends apply to larger
aggregations managed by corporate agribusiness in
Australia, this IM references the Australian Farmland Index.
This independent index is driven by the US-based National
Council for Real Estate Investment Fiduciaries (NCREIF).
The council was established to provide an independent
source of real estate performance information. Since its
inception in Australia in March 2015, the index has shown
total annual farmland returns of 13.7%, with income of 6.1%
and capital appreciation of 7.6%.10
Figure 2: Average annual growth in farmland
median prices across 20 years
NT
QLD
7.5%
WA
4.3%
SA
6.6%
NSW
7.5%
VIC
6.6%
TAS
7.5%
17
4.3 An attractive return profile
Farmland offers a return profile uncorrelated to traditional investment markets, combined with proven record of low comparable
volatility providing compelling defensive asset characteristics.
Kilter Rural has extracted data from the Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES),
ASX All Ordinaries indices and the RBA, to show the return profile of farms with total value greater than $1 million and how
they compare with traditional investment markets. Figures 3 and 4 show the low levels of return correlation and volatility when
compared with the All Ordinaries.

Figure 3: Total Australian farm return (>$1m value) compared with traditional financial investment markets11

60%

50%

40%

30%

20%

10%

0%

-10%

-20%

-30%
1991

1993

1995
1996
1997
1998
1999

2001

2003

2005
2006
2007
2008
2009

2011

2013

2015
2016
2017
2018
2019
1992

1994

2000

2002

2004

2010

2012

2014
> $1M Farm Capital Return All Ordinaries 10 Year Australian Government Bond

Figure 3 shows that: • Total farmland returns (>$1million capital value) are
significantly less volatile than the All Ordinaries and
• During the GFC of 2008-09, annual farmland returns
demonstrate a low level of correlation (0.1612) to the
achieved 4.1% and the All Ordinaries Index lowering 22.1%.
All Ordinaries Accumulation Index. Volatility of farmland
• Farmland returns have been consistently higher than returns is 4.0% against the All Ordinaries 13.5%.
returns on 10-year Australian Government bonds.
• Farmland provides an inflation hedge.
This reduced volatility combined with the characteristics
of a real asset provide capital preservation elements that
can ultimately reduce risk and balance total portfolio returns
over time.

11 ABARES, S&P Dow Jones Indexes, RBA, Kilter Rural (all data is presented as total return; operating and capital).
12 Calculated using data from ABAREs and All Ordinaires Accumulation Index across 20 years.

18
Figure 4: Average total investment return (yield and growth) for the 20 years to 2019,
Australian farmland (>$1m value)

10%

9% >$1M Capital
Australian Farmland All Ordinaries
8%

7%

6%
RETURN

5% Australian Farmland (All)

4% 10-Yr Australian
Government
3% Bond Rate
2%

1%

0%
0% 2% 4% 6% 8% 10% 12% 14% 16%

Volatility of Returns (Standard Deviation)

Source: ABARES, S&P Indexes, RBA, Kilter Rural.

Figure 4 shows key points specific to Australian farmland
relative to other investment markets, and is sourced from
ABARES, S&P Index data, RBA and Kilter Rural:
• Australian farmland average annual total return of 8.7%
(>$1million capital value).
• Australian farmland volatility of returns of 4.0%.
This return shows one third of the volatility of the
All Ordinaries, on average.
• Farming at scale generates improved returns.
It shows Australian farmland compares favourably with
Australian equities and the 10-year Australian Government
bond rate.
4.4 Low sovereign risk
Australia maintains a stable and transparent system of
government. Foreign investment into Australian farmland
and agribusiness assets is monitored by the Foreign
Investment Review Board (FIRB). An independent statutory
body, the FIRB is in place to ensure that foreign investment
into Australian agriculture is undertaken with the highest
standard of corporate behaviour, with a full understanding
of the Australian regulatory environment while also abiding
by all relevant laws.
In recent years, additional demand from foreign capital has
underpinned the capital appreciation of Australian farmland.
However, the FIRB has not impeded this trend through
obstruction of capital inflows into this sector.
In 2017-18 the total value of approved foreign direct
investments (FDIs) into Australian, agriculture, forestry
and fishing was $7.9 billion. This was up from $7.0 billion
in 2016-17 and $4.6 billion in 2015-16.13 As a temporary
measure, due to COVID-19 impacts on industry, the
Australian Government temporarily changed the FIRB referral
threshold to $0, meaning a greater number of investments
by foreign persons in Australia is required to be notified to
the Treasurer for review. At the time of publishing it is unclear
when the threshold will lift.
Within Australia there are relatively low levels of government
intervention, specifically agricultural subsidies. The
Organisation for Economic Co-operation and Development
(OECD) measures subsidies and assistance to agricultural
producers around the world and publishes the results in its
Producer Support Estimate (PSE) report. The PSE14 shows
Australia has the second-lowest percentage of government
subsidy funds provided to agriculture when compared with
11 other OECD countries (2.0%).15
The lack of a government safety net helps drive the need for
productivity and innovation in Australian agriculture to remain
globally competitive.

13 Foreign Investment Review Board annual report 2016-17.

14 The Producer Support Estimate (PSE) is an indicator of the annual monetary value of gross transfers from consumers and
taxpayers to agricultural producers, measured at the farm gate level, arising from policy measures that support agriculture.
15 Organisation for Economic Co-operation and Development (OECD), ‘Producer and Consumer Support Estimates database’, 2016.

INFORMATION MEMORANDUM  -  AUSTRALIAN FARMLANDS FUNDS  -  JUNE 2020 19

4.5 Competitive advantage
An investment in the Funds provides exposure to Australia’s
established competitive advantages. Australia’s geographic
position has driven a need for strict biosecurity laws and
practices, in order to safeguard its unique soil, water and
ecosystem assets.
There are several factors that give Australia a competitive
advantage in a global agricultural market that has a strong
focus on traceability and, therefore, credibility of food
safety. The following factors underpin Australia’s renowned
‘clean and green’ branding:
• Strict bio-security regulation.
• Globally recognised high food safety standards.
• Low levels of pollution in agricultural areas.
• Uptake of technology to enable true paddock-to-plate
traceability, and
• Proactive environmental regulation protecting soil,
biodiversity and water assets.
The recent free trade agreements (FTAs) with China, Japan
and Korea have had a positive impact on demand for nearly
all irrigated agricultural commodities and products. For
the year ending June 2018, Australia exported $2.92 billion
in horticultural products, with the three states making up
the sMDB accounting for 76% of this value. Asian markets
bought 68% of these exports.16 See Figure 6 on page 22.
16 Australian Horticulture Statistics Handbook 2018/19.
17 ABARES, ‘Diversity in Australia’s agricultural workforce’, 2015.
20
4.6 Socio-economic drivers
Capital constraints and the challenges of succession in
family-owned farms are two significant barriers to farm
expansion in Australian agriculture today.
The median age of agriculture industry workers in Australia
is 60. This is 10 years older than the median age for the
general Australian workforce.17
The impacts of increased climate volatility and fluctuating
terms of trade are driving farm rationalisation by constantly
challenging the viability of under-scaled farm operations.
Those businesses able to scale up and remain profitable
throughout the commodity cycle are driving the data trends.
Figure 5 shows:
• The downward trend in farm numbers and the
rationalisation of farm holdings are already underway
in Australian agriculture. The top operators remain
and continue to expand.
• The average age of farmers has increased by about
10 years between 1993-2019.
• Efficiencies and the uptake of new technology is critical
to remain viable at scale.
These trends have created the opportunity for investment
capital to enter where availability of land for purchase has
been historically scarce.
Figure 5: Farms by size and average age of farmers (gross turnover and broadacre cropping18)

90,000 62
80,000
60
70,000

Average Age of Farmers

60,000 58
Number of Farms

50,000
56
40,000

30,000 54
20,000
52
10,000

0 50
1993 1997 2002 2007 2012 2017 2019

Less than $500K $500K-$1M > $1M Age

18 ABARES data 2019.

INFORMATION MEMORANDUM  -  AUSTRALIAN FARMLANDS FUNDS  -  JUNE 2020 21

Figure 6: Australia’s Free Trade Agreements

TRANS-PACIFIC
PARTNERSHIP

A$214BN
TRADE WITH AUSTRALIA

CURRENT PIPELINE % TRADE

FTAs FTAs IN FTAs

8 7 CURRENT 28%
FUTURE 45%

22
 JAPAN-AUSTRALIA
FTA

A$69BN
TRADE WITH AUSTRALIA

KOREA-AUSTRALIA FTA

A$30BN
TRADE WITH AUSTRALIA

CHINA-AUSTRALIA FTA

A$125BN
TRADE WITH AUSTRALIA

NZ-AUSTRALIA FTA
ESTABLISHED JANUARY 1993 AND IS CENTRAL TO THE
AUSTRALIA-NEW ZEALAND TRADE AND ECONOMIC RELATIONSHIP

INFORMATION MEMORANDUM  -  AUSTRALIAN FARMLANDS FUNDS  -  JUNE 2020 23

5 Why Australian water?

• Water market overview

• Experienced management
• The benefits of owning Water Entitlement
• Fund water portfolio
• Market drivers
• Water price trends

Water is the world’s most vital tradeable commodity

Large and
sophisticated
water
market

Strong Scarce and

demand no substitute
drivers Water resources

Uncorrelated
returns

24
5.1 Water market overview
Australia is a world leader in the utilisation of water markets
to facilitate optimal movement of water to its highest value
use. The Funds primarily target water ownership within
the sMDB.
This particular water market is widely regarded as the
most sophisticated in the world. The sMDB water market
encompasses the major river systems of the Murrumbidgee
in the north, the full length of the Murray and the Goulburn
in the south. It is Australia’s largest irrigation supply system
supporting a diverse range of crops and industries including
fruit, nuts, grains, fodder, dairy, cotton and viticulture.
The sMDB water market retains transparent, robust legal
and regulatory frameworks and has sufficient liquidity to
accommodate the ongoing deployment and divestment of
capital at a scale sufficient to satisfy the Funds’ objectives.
Water Entitlement
A Water Entitlement is defined by the Commonwealth
Water Act (2007) (the Water Act) as a ‘perpetual or ongoing
entitlement, by or under a law of a State, to exclusive access to
a share of the water resources of a water resource plan area’.
The characteristics of Water Entitlement, often referred to
as ‘permanent water’, have been structured to be consistent
with those of real property. However, Water Entitlement also
has the attractive advantages of being essentially immune
to physical damage caused by owners, lessees or users and
does not incur depreciation.
Based on an assessment of Water Entitlement market values,
the total market value of privately held Water Entitlements
within the sMDB was about $21 billion as at 30 April 2020.19
Figure 7: Southern Murray-Darling Basin Water
Entitlement ownership by volume
20%
7%
73%
Commonwealth Holdings
State Holdings
Private Holdings
19 Data sourced from State water registers, Commonwealth and State Environmental Water Holders and valuation from independent valuers.
INFORMATION MEMORANDUM  -  AUSTRALIAN FARMLANDS FUNDS  -  JUNE 2020
Water Allocation
Water Allocation, often referred to as ‘temporary water’,
is defined by the Water Act as ‘the specific volume of
water allocated to Water Entitlements in a given water
accounting period’.
In practice, allocation percentages are announced by the
relevant water authorities in relation to entitlement in each
water catchment trading zone throughout the water year
(July to June). These announcements are based upon
consideration of the volumes held in catchment storage
dams and seasonal rainfall and inflow expectations. Wetter
years will typically result in higher allocations being made
available than in drier years. When an announcement results
in an increase in the allocation percentage, additional Water
Allocation is then credited to Water Entitlement holders
where it is held in a water account. These water accounts
allow the Water Allocation balance to be drawn down by
ordering the delivery of physical water to farm for irrigation
and facilitate trade to other water accounts.
5.2 Kilter Rural’s experience
in water investments
Kilter Rural has been managing water assets in the
sMDB since 2007 and now has more than $400 million in
water assets under management. Kilter Rural is a leading
innovator in developing water products to provide irrigators
with risk management options for securing their annual
water requirements.
Kilter Rural has more than 15 years’ experience directly
managing large-scale irrigation operations, including
development and establishment through to product
marketing. Managing more than 12,000ha of both irrigation
and dryland farmland helps provide valuable management
insight into how water products can be best deployed to assist
irrigators while providing sustainable returns to investors.
25
5.3 The benefits of owning
Water Entitlement
Irrigated farmland presents a compelling opportunity to
enter an agricultural investment as it provides an exciting
opportunity for investors to gain access to both the land and
water markets within Australia. Within the sMDB, water is
readily tradeable and as a finite commodity is often exposed
to absolute scarcity:
• Entitlements are mortgageable, divisible and can
be amalgamated.
• Entitlements maintain the legal attributes of property
title ownership.
• Minimal annual holding costs and no repairs and
maintenance.
Strongly performing asset class
Water is the world’s most-vital, tradeable commodity,
increasing in scarcity and with no substitute. With a growing
global population driving demand for food and fibre, fresh
water supplies, both domestically and globally are under
pressure. Coupled with climate change, these supply and
demand drivers are contributing to Water Entitlements
becoming an increasingly valuable asset to own.
Water investment returns comprise a mixture of yield and
capital growth. Water Entitlements generate a ‘natural’ yield
in the form of the market value of the Water Allocation they
generate annually. The Funds are targeting a high weighting
of high reliability and high security entitlement classes across
Victoria, New South Wales and South Australia, which have
historically received higher allocations compared with other
classes. These Water Entitlement classes have:

• Provides water supply security to underpin primary • Achieved between 4% and 9% yield p.a. since 1 July 2007.
production enterprises. • In the past 12 years to January 2020, high reliability and
• Optionality for income generation – use on farm to grow high security Water Entitlement classes have achieved
crops or sell into the market. annualised capital growth rates of more than 10.0%.

Figure 8: Comparison of return versus risk across multiple asset sectors (July 2007 to April 2020)

16%

14% Water Index

12%

10% Gold
RETURN

8%

6% Bond

4% ASX

2%
REIT
0%
0% 2% 4% 6% 8% 10% 12% 14% 16% 18% 20% 22%

Volatility (Standard Deviation)

The water index, developed by Kilter Rural, measures the This provides a favourable hedge against farmland
performance of an investment in sMDB Water Entitlements production becoming uneconomic in times of high water
for comparison against other published accumulation indices. prices. The Funds’ preference to grow annual crops (planted
This index is a combination of capital and accumulated net and harvested within a year) in contrast to perennial/
income from Water Allocation (yield) from July 2007. permanent crops (almonds, olives, citrus etc) enables this
flexibility to choose the optimal source for generating revenue
Optionality to hedge farmland revenue which poses the least risk to the Funds.
When wetter seasonal conditions results in lower Water
The Funds will purchase Water Entitlement sufficient to cover
Allocation prices, the Funds will add value to the Water
the operational requirement of each farmland parcel within
Allocation it receives by utilising it as an input for farmland
the Funds’ portfolio. Water is central to the protection and
production. Conversely, when seasonal conditions are drier
optionality of investment returns over the Funds’ term.
and storage levels lower, the resultant higher water prices
can lead to superior returns being generated by scaling back
farmland production and selling some, or all, of the Water
Allocation into the market.

26
 Figure 9: Optionality of generating revenue based on agricultural
production or water sales depending upon conditions
WATER ALLOCATION PRICE ($/ML)

Water
Sales Revenue

$200
Crop Production
Revenue
$100

$0
Season 1 Season 2

Uncorrelated return exposure

As an alternative real asset class, water provides the opportunity for investment diversification and risk mitigation. High reliability
and high security Water Entitlement provides a return profile uncorrelated with more traditional investment sectors.
Water returns are also subject to exogenous factors, notably rainfall, that have limited impact on mainstream asset classes.
For these reasons, it is reasonable to expect that the long-term correlation of water with traditional asset classes (see Figure 10)
will remain low, underpinning the diversification benefit of water as an asset class.

Figure 10: Water Index Correlation with multiple asset sectors

S&P ASX 200 S&P ASX 200 GOLD S&P AUSTRALIAN

A-REIT GOVERNMENT BOND

Water Index Correlation -0.24 -0.23 0.15 -0.01

Production reliability drives higher margins

Water security through rainfall or irrigation, is the most vital
input for agricultural production. Ensuring a secure water
supply mitigates a large proportion of annual production
risk in the field. This increased certainty assists continuity of
offtake supply and therefore supports Kilter Rural’s ability
to negotiate favourable offtake contracts. This fundamental
mitigation of climatic risk creates marketing opportunities and
differentiates the Funds from producers highly reliant upon
variable annual rainfall.
5.4 The Funds’ water portfolio
As at 30 April 2020, the Funds have acquired high reliability
and high security Water Entitlement of more than 2580
megalitres (ML) diversified across both the Goulburn system,
where farmland aggregation is located, as well as in the high
demand Lower Murray region.
The Funds also own 398ML of Victorian Low Reliability Water
Entitlement, which is primarily utilised to provide a secure
capacity to carryover water from one water year to the next.
This option can be most beneficial when water prices are
low. Carrying over to the next year helps lock in water at
an attractive price.

INFORMATION MEMORANDUM  -  AUSTRALIAN FARMLANDS FUNDS  -  JUNE 2020 27

5.5 Market drivers
Changing market dynamics are driving increases in water
prices. The sMDB water markets in which the Funds
participate are driven by the economic forces of supply and
demand. However, these markets differ from most markets in
one key aspect – it is highly unlikely that any additional large
storages will be built in the sMDB, so the amount of Water
Entitlement on issue will effectively remain capped, ensuring
a finite supply.
These markets are experiencing strong long-term trends,
which impact both supply and demand, and are combining
to underpin growth in both growth in both Water Entitlement
and Water Allocation prices. These trends include:
a. The impacts of climate change are causing a reduction
in Winter-Spring rainfall, reducing stream inflows and
resultant storage supplies.
b. Available Water Entitlements on issue for consumptive
use have reduced by circa 30% due to implementation
of the Murray-Darling Basin Plan (Basin Plan) to date.
Ongoing implementation of the Basin Plan will continue
to reduce Water Entitlements available for consumptive
use through until 2024.
c. There has been a significant increase in the demand
for Water Allocation, particularly in the Lower Murray
and Riverland Regions, resulting from the substantial
increase in plantings of high water-use perennial
horticulture crops.
d. The economic capacity of perennial horticulture crops to
outbid growers of conventional annual crops due to their
higher profit margins, and the need to protect the capital
invested to establish their crops is materially changing
the dynamics of demand for Water Allocation.
28
Climate change contributes to reduced supply
The Australian Bureau of Meteorology reports that in the
past 40 years there has been a shift towards drier conditions
across south-western and south-eastern Australia during
April to October.
Rainfall in these cooler Autumn to Spring months is critical
to achieving soil saturation in catchment areas which creates
water run-off in order to generate inflows into storages.
This drying trend in the sMDB has resulted in a material
reduction in catchment runoff, consequently reducing
storage inflows. The River Murray system has experienced
more than a 17% reduction in inflows in the past 30 years
compared with the long-term average, with the decline
accelerating to more than 35% in the past 20 years.
Reduced inflows into storages means less water is available
to be allocated to Water Entitlements and reduces the supply
of Water Allocation for consumptive use.
Reduction in supply of consumptive Water Entitlements
The volume of Water Entitlement on issue in the sMDB is
capped. In order to issue more Water Entitlements, the
construction of additional storages would be required
(new dams), which is considered unlikely for both political
and geographical reasons.
 The supply of Water Entitlement available for consumptive
purposes has been reduced by about 30% as a result of
the implementation of the Basin Plan environmental water
recovery targets. The Basin Plan has a further recovery target
of 450 gigalitres (GL) by July 2024, which will reduce the
volume of Water Entitlement on issue for consumptive use
by a further 6%.
These reductions in Water Entitlement on issue for
consumptive use are permanent.
Increasing demand for water
Reasons for increase in inelastic demand include:
• Permanent horticulture crops are high water users.
• Permanent horticulture demand is highly inelastic.
• Demand to service permanent horticulture crops is
forecast to continue.
The separation of land and water titles in 2007 and the
development of water markets in the sMDB has been vital
in assisting irrigators to manage water needs and water
access risks within and across seasons. Since then, water
resources have migrated to higher economic value uses,
as was intended when the market was established.
In the Lower Murray region, there has been a significant
increase in the area planted to high-value permanent
horticulture crops, such as almonds, walnuts, hazelnuts,
olives, citrus and grapes. Almond plantings in Australia
have increased more than 12-fold from about 3500ha in
2000 to more than 47,500ha in 2018, of which 97% are
located along the lower River Murray system in either
the Sunraysia (Victoria), Riverland (South Australia)
or Riverina (New South Wales) regions.
Many permanent horticulture crops are high water users.
For example, almonds use 13 to 14ML/ha at maturity
(full nut-producing capacity), with the majority of water
demand concentrated over Summer and early Autumn.
At current nut prices almonds generate a higher gross
margin per megalitre of water used than virtually any annual
cropping alternative.
However, it is the inelastic demand for water generated by
perennial horticulture that is having the most pronounced
impact on water market dynamics. These crops require
sufficient watering every year to generate optimum
production regardless of water availability and prices.
Permanent crops, such as almonds, require significant
capital investment to establish (more than $50,000/ha) and
have an economic life of more than 20 years. Accordingly,
in times of water scarcity the owners of these assets are
highly incentivised to outbid other water users in order to
secure water to protect their investment.
With many recent horticultural developments yet to reach
full maturity and additional new developments approved
still to come online, the demand for water to service these
crops is forecast to increase further. Analysis released by
the Victorian Department of Environment, Land, Water and
Planning (Vic DELWP) projects that by 2027 these crops
will potentially consume all the available water in the Lower
Murray, even in years of near average supply (see Figure 11).

Figure 11: Horticulture demand and consumptive water availability for the River Murray
downstream of Barmah Forest
Source: Vic DELWP

1,600

1,400

1,200
GIGALITRES PER YEAR

1,000

800

600

400

200

0
2003 2009 2012 2015 2023 2025 2027

The yellow and grey lines include an allowance
of 20GL for water trapped in from the Goulburn and
Murrumbidgee valleys. Trade assumptions are
approximate and will vary year on year depending
on seasonal conditions, crop prices and other drivers.
■ Actual horticulture demand
■ Estimated forecast horticulture demand
■ Expected future consumptive water availability – near average year
■ Expected future consumptive water availability – drought year

INFORMATION MEMORANDUM  -  AUSTRALIAN FARMLANDS FUNDS  -  JUNE 2020 29

 5.6 Water price trends
Water Allocation price trend
The impacts of increased inelastic demand on the Water Allocation price is more apparent in times of water scarcity, as shown in
Figure 12 for the River Murray system.
The available Water Allocation supply for FY2019 was only 8% less than FY2016 yet the median annual price in FY2019 was double
that for FY2016.
Similarly, the available supply level in FY2020 is two-thirds the supply of FY2016 but the FY2020 median Water Allocation price is
close to three times the median price for FY2016.

Figure 12: The River Murray system Water Allocation supply and annual median price

10,000GL $800

9,000GL
$700
8,000GL

WATER ALLOCATION PRICE $/ML

$600
AVAILABLE WATER SUPPLY

7,000GL
$500
6,000GL

5,000GL $400

4,000GL
$300
3,000GL
$200
2,000GL
$100
1,000GL

0GL $0
FY2011 FY2012 FY2013 FY2014 FY2015 FY2016 FY2017 FY2018 FY2019 FY2020

■ Water Supply ■
Lower Murray Water Allocation Price

30
 Water Entitlement price trend
• Perennial horticulture crops have a higher water supply Between April 2016 and April 2017, Water Allocation prices
risk profile when compared with more traditional annual fell by more than 80% in connection with the very wet 2016
crops, because of their requirements for large water Winter and Spring, as shown in Figure 13. At this time the
volumes and inelastic demand. impact on Water Entitlement prices was negligible with values
supported by strong demand from investors and irrigators.
• Permanent horticultural investors recognise the benefits
of Water Entitlement ownership versus reliance upon the
volatile spot market. This has supported strong capital
growth trends in entitlements values in recent years as
owners of these assets have sought to secure additional
Water Entitlement to support their crops.

Figure 13: Water Capital Index versus Water Allocation price

80% drop in Water
300 Allocation price but 800
negligible impact on
700
Water Entitlement price
250
600
WATER CAPITAL INDEX

200 500

$/ML
400
150 300

200
100
100

50 0
Jul 07

Jan 08

Jul 08

Jan 09

Jul 09

Jan 10

Jul 10

Jan 11

Jul 11

Jan 12

Jul 12

Jan 13

Jul 13

Jan 14

Jul 14

Jan 15

Jul 15

Jan 16

Jul 16

Jan 17

Jul 17

Jan 18

Jul 18

Jan 19

Jul 19

Jan 20
Index (Capital) Allocation Price

INFORMATION MEMORANDUM  -  AUSTRALIAN FARMLANDS FUNDS  -  JUNE 2020 31

6 The Funds’ impact

• Founded for impact

• Regenerate existing agricultural areas
• Ensuring climatic resilience
• Biodiversity protection
• Carbon sequestration at scale
• Leadership in impact measurement

32
6.1 Kilter Rural was
founded for impact
Kilter Rural was founded by owners with a 30-year history in
delivering sustainable management of Australia’s land, water
and ecosystem assets across farming landscapes.
Entrenched at company inception was the principle of
delivering financial returns with positive environmental and
social impacts. Since 2004, Kilter Rural has delivered large-
scale impact investments in Australian farmland and water -
balancing agricultural production with ecosystem protection.
The Australian Farmlands Funds offers investors access to
the next iteration of a proven landscape regeneration model
for irrigation farmland.
The Funds’ farmland regeneration model is built on the
success and knowledge gained through 15 years of
management repairing dilapidated irrigation farmland for
a $25 billion institutional investor.
Through the Funds, agriculture and ecosystem protection
are fundamentally inter-dependent operations that improve
long-term investment performance with reduced risk.
Financial returns are not compromised for environmental
objectives, instead these two key elements combine to
underpin long-term value.
The Funds have four key impact components:
1. Regenerate and renew existing irrigation farmland
(avoiding greenfield developments).
2. Redesign irrigation and environmental assets to mitigate
risk from a future of increased severe weather events.
3. Revegetating 30% of farmland area with woodland
for biodiversity protection and carbon sequestration
(starting base of 0%-5% vegetation cover).
4. A high-value mix of organic and conventional cropping,
applying an innovative soil management regime for
carbon sequestration, increased moisture holding
capacity and fertility.
20 The Guardian, September 2019.
INFORMATION MEMORANDUM  -  AUSTRALIAN FARMLANDS FUNDS  -  JUNE 2020
6.2 Regenerate existing farms
or greenfield development?
Regenerating farms already highly modified for agriculture
offers an opportunity to combine returns with impact for
investors. The Funds will play a leadership role in agricultural
and ecosystem regeneration.
This leadership position is important as the world continues
to pursue the development of native forests and grassland
regions, further exacerbating large scale loss of biodiversity
around the globe. The world’s agricultural footprint needs
to be stabilised.
Kilter Rural is the only organisation in Australia with an
inter-decadal history demonstrating it is possible to deliver
both profit and impact through regeneration of agricultural
landscapes at scale.
The Funds target existing agricultural districts with potential
for productive uplift to help meet the increasing demand for
food and fibre. This approach avoids the need for further
ecosystem and habitat destruction associated with the
development of greenfield sites.
Underutilised and undercapitalised, sometimes degraded,
farming landscapes represent key opportunities for
intervention. The Funds will benefit from the experience and
scientific skills of Kilter Rural staff in regenerating agriculture,
water and ecosystem assets to deliver resilient farmland
operations for the benefit of long-term investors.
Historically, the response to increased demand for
agricultural produce has been the targeted acquisition of the
cheapest, easiest to obtain natural capital – the replacement
of forests and native grasslands with conventional
monoculture farming. This approach is often described as
‘greenfield development’ and can involve removal of residual
ecosystem assets. The world is losing an area the size of the
UK (or 250 million square kilometres) to deforestation every
year.20 The impact will drive further loss of biodiversity but,
just as importantly, remove carbon sequestration and oxygen
provision services vital to sustaining life on earth.
Land clearing for agriculture neglects the underlying
principle that life on earth requires functioning and
productive ecosystems and it fundamentally overlooks the
value provided by natural assets.
33
6.3 Carbon sequestration
services
The Funds will play an industry leadership role in both CO2
sequestration and emissions reduction through a series of
operational interventions. As a result, the Funds will ensure
delivery of a scaled net-carbon sink.
This will be achieved by actively sequestering carbon in
both soil and native revegetation. On the northern Victorian
plains, re-establishing native vegetation can conservatively
sequester on average 3.5 tCO2/ha/year over a multi-decadal
time. Across 10 years and 3000ha (30% landscape native
vegetation cover) this equates to locking up 105,000 tCO2.21
Application of regenerative soils management, integration
of organic compost, reduced tillage and inclusion of
out-of-season cover crops is expected to result in
sequestration of up to 10 tCO2/ha/year of cropping land.
This represents an increase of 1% in soil organic carbon
across a decade.
Kilter Rural has proven capability in landscape carbon
and emission accounts applied to its 15-year institutional
investment mandate in north-west Victoria. This mandate has
produced a substantial ‘in-paddock’ carbon-positive balance
of more than 5000 tCO2 in FY18/19. This is the equivalent
of removing more than 1000 average-passenger cars from
the road for a year.
6.4 Designed for weather events
As a long-term steward of agricultural landscapes, Kilter Rural
interprets its duty to Investors as one encompassing and
addressing climate related risks. Farmland and ecosystem
assets are designed and managed to ensure ongoing viability
and resilience to the already evidenced increase in extreme
weather events as a result of climate change.
A recent International Panel on Climate Change (IPCC)
statement outlined the potential impacts of global warming.
Few agricultural regions of the world will be exempt.
Emissions from the global food system comprise between
21 and 37% of human generated greenhouse gases,
while a quarter of Earth’s ice-free land is subject to
human-induced degradation.22
Recent analysis on climate in the Murray Darling Basin
(MDB) suggests:
• Since 1970 most of the MDB has been warming at a
rate of between 0.2 and 0.4°C per decade, compared
with a national average of about 0.15°C per decade.
Nine of the MDB’s 10 warmest years on record have
occurred since 2005.23
21 Emissions Reductions Fund: Reforestation by environmental or Mallee plantings FullCAM method.
22 IPCC Special Report on Climate Change, Desertification, Land Degradation, Sustainable Land Management,
Food Security, and Greenhouse gas fluxes in Terrestrial Ecosystems, 7 August 2019.
23 Deluge and Drought: Australia’s Water Security in A Changing Climate. www.climatecouncil.com.au
24 Deluge and Drought: Australia’s Water Security in A Changing Climate, The Climate Council of Australia 2018.
34
• Rainfall has declined by between 15 and 25% in the
months April through June over south-east Australia in
the past 20 years, and
• Across the MDB stream flows have declined by 41% since
the mid-1990s compared with the long-term average.24
Kilter Rural has designed landscapes to ensure resilience
to climate change influenced weather events. It has
regenerated more than 5000ha of irrigation farmland in
preparation for severe droughts, floods and rainfall events.
This strategic planning permitted successful delivery of
farming programs through:
• The worst drought in Australian recorded history, and
• The largest flooding event in 100 years.
Through the Funds, Kilter Rural will pursue the expansion
in delivery of our progressive approach to regenerative
agriculture and climate resilience for the benefit of investors,
the environment and communities in which it farms.
6.5 Biodiversity protection
Large-scale clearing for 200 years has delivered legacy
impacts that are still playing out, manifest by native species
decline, soil and water degradation and exacerbating climate
change by removing a large area of natural-carbon sinks.
Habitat removal is the number one cause of species
extinction, now being exacerbated by climate change.
In Victoria and New South Wales, up to 60% of the primary
terrestrial ecosystems that existed before European
settlement have been cleared for conventional agriculture.
The Funds will revegetate up to 30% of landscape under
management with locally endemic native species, replacing
key components of ecological vegetation communities.
The Funds’ target regions typically have about 5% native
vegetation cover remaining. This revegetation effort will
represent a significant escalation in local native biodiversity.
Increasing biodiversity on farmland has multiple proven
benefits for groundwater and salinity management and
prevention, crop health and buffering from weather events,
soil moisture retention and beneficial pollinators and
pest-control species.
Kilter Rural considers the scale and extent of issues facing
Australia’s, and the world’s, natural assets as a fundamental
opportunity. The scope for new large-scale systems of capital
allocation in landscape regeneration and ecosystem repair
can deliver products and services that drive profitability and
establish a long-term competitive position.
Kilter Rural designs farm layouts to withstand the increased frequency of intense weather events. This 84mm rainfall event was
drained off within 24 hours so that crop yield potential was not compromised. Managing for climate change is core business.

6.6 Measuring and

reporting impact –
environmental accounts
Kilter Rural has a demonstrated ability to monitor, interpret
and report on the condition of natural assets within a
standardised and quantified environmental accounting
framework called the Accounting for Nature Framework
(AfN). This framework was founded by the Wentworth Group
of Concerned Scientists. It is designed to find, implement and
drive solutions for environmental stewardship to secure the
long-term health of Australia’s land, water and biodiversity.
For the Funds, this means the application of a transparent,
technically robust and accountable standard that will be the
guiderail to sustain long term food and fibre production and
long-term value to investors.
AfN is aligned with the UN-adopted System of
Environmental-Economic Accounting (SEEA) and for the
Funds will result in the production of an annual certified
account of the condition of the underlying natural asset base
(soil, vegetation, water) that supports all farm production.
AfN employs a scoring unit known as the Econd that
comprises a value between 0 and 100, the value ascribed
being relative to the condition of these assets in their natural
(undisturbed) state.
For a farm enterprise, the trend in Econd over time provides a
simple relatable and tangible measure of farm environmental
condition trajectory. Implementation of AfN will reveal the
real impact of the Funds’ farmland, water and ecosystem
investment management activities, built upwards from the
granular landscape level.
Certified responsible investment
The Certification Symbol signifies that a product or
service offers an investment style that takes into account
environmental, social, governance or ethical considerations.
The Symbol also signifies that Australian Farmlands
Funds adheres to the strict operational and disclosure
practices required under the Responsible Investment
Certification Program for the category of Product Provider.
The Certification Symbol is a Registered Trademark of the
Responsible Investment Association Australasia (RIAA).
Detailed information about RIAA, the Symbol and the
Australian Farmlands Funds’ methodology, performance and
stock holdings can be found at www.responsiblereturns.com.
au, together with details about other responsible investment
products certified by RIAA.*
* The Responsible Investment Certification Program does not constitute
financial product advice. Neither the Certification Symbol or RIAA
recommends to any person that any financial product is a suitable
investment or that returns are guaranteed. Appropriate professional
advice should be sought prior to making an investment decision.
RIAA does not hold an Australian Financial Services Licence.

INFORMATION MEMORANDUM  -  AUSTRALIAN FARMLANDS FUNDS  -  JUNE 2020 35

7 Investment and management strategy

• Identify underutilised farmlands

• Ensure water delivery security
• Aggregate, renew and transition
• Manage price risk
• Exit strategy

36
7.1 Strategy overview
The Funds’ investment strategy involves the acquisition
of a portfolio of farmland and water assets targeted to
deliver a balance of yield and capital growth for the 10-year
investment term.
Through the Funds, investors will access Kilter Rural’s
investment model to generate long-term value creation
through yield transformation and scaled ecosystem
protection. Supporting the Funds’ goal of utilising
‘quality farmland’ are property aggregations that
provide a mix of arable and environmental landscape,
to provide a variety of returns to investors.
This balanced approach to rural landscape renewal
has been proven to moderate risks associated with
extreme weather while producing high-value agricultural
commodities, all underpinned by advances in long-term
soil and ecosystem health.
This Kilter Rural strategy has been enhanced with the
application of an operational methodology for assessing
and reporting on the condition of environmental assets.
This track record of delivering environmental improvements
drives agricultural productivity, financial performance and
long-term capital appreciation.
INFORMATION MEMORANDUM  -  AUSTRALIAN FARMLANDS FUNDS  -  JUNE 2020
The Funds’ investment strategy encompasses:
• Target underutilised farmland: Land use transition
presents opportunity for attractive entry value and the
ability to aggregate scaled areas of high quality soils.
• Water security: The Funds will own a portfolio of high
security Water Entitlement and operate only in regions
with secure water delivery.
• Regenerate and value add: Aggregate properties,
regenerate soils, import irrigation technology and
repurpose to a high-value cropping program buffered
by scaled ecosystem protection.
• Mitigate price risks: Remove exposure to commodity
price fluctuation by working through established OTAs
to service unmet demand for high value conventional and
organic produce.
• Mitigate industry and climatic risks: A geographic
and industry spread within the sMDB mitigates industry
and climatic risk.
• Monitor and report impact: Utilise Accounting
for Nature framework to report monitor, measure and
report annually on the trend in environmental condition
of natural capital (soil, vegetation, water, fauna) and
progress towards defined targets.
• Exit options: The Funds’ aggregation approach makes
for an attractive investment option to corporate and
institutional-grade investors and provides a variety
of exit strategies.
7.2 Underutilised farmland linked
with secure water delivery
Irrigation regions with secure water delivery access, quality
soils, and remnant environmental assets are targets for
the Funds. Significant areas within irrigated regions of
Australia retain these positive features but, due to difficulties
accessing capital and a lack of scale, agricultural activity has
stalled or reduced.
The Funds invest to aggregate and regenerate, delivering
high-value agricultural output with efficiencies in cost and
resource use. Importantly, they ensure access to water
delivery at rates sufficient to meet irrigation water needs
throughout the year. The Funds target farmland closer to
irrigation water storages rather than end-of-system regions
that are now exposed to significant water delivery risk.
37
7.3 Aggregate, redevelop and transition
Quality farmland within Australia’s largest water-trading
system provides a resilient and reliable asset base for an
investment in Australian agriculture. By aggregating smaller
properties into larger operational farming and ecosystem
land management units the Funds will deliver operational
efficiencies driving increased productive output and
improvements in environmental condition.
Kilter Rural assesses the inherent ability of a farming
landscape to deliver food and fibre within a broader
environmental envelope that underpins long-term
CASE STUDY 1: Underutilised irrigation land
Photo A, shows underutilised irrigation landscape in 2012.
This site had not utilised irrigation water for several years and
was used for sporadic sheep grazing. Photo B shows the
same farm in 2013, regenerated by Kilter Rural and producing
Photo A
38
sustainable production. The Funds employ a land
capability and suitability approach to soil management
and irrigation development.
As land capability permits, Kilter Rural applies its
experience in the installation of irrigation technologies to
deliver operational efficiencies, increased capital value and
generate improved crop yields over the Funds’ term. In the
past 12 years Kilter Rural has delivered scaled irrigation
redevelopments and reconfiguration projects across
more than 5000ha of farmland.
high-value field tomatoes for processing, at an average yield
of 120 tonne/ha, generating gross margins of between $2000
and $3000/ha. The IRR on the development of this block is
more than 15% on a 10-year term.
Photo B
CASE STUDY 2: Water delivery security
The Federal Government has targeted irrigation regions of
the sMDB to ensure that the water requirements of irrigators
can be delivered while balancing the environmental needs
of wetlands and river systems.
As part of this irrigation modernisation, the government
has invested more than $2 billion (a portion of the $8 billion
committed to a range of water-related initiatives across the
MDB25) in water delivery infrastructure across these joint regions.
Photo A
25 Commonwealth Water Reform, Investment in the Murray-Darling Basin. ‘Analysis of social and economic outcomes’.
Department of Agriculture and Water Resources.
CASE STUDY 3: Redevelopment: irrigation technology and innovation
Photo A shows an old flood-irrigation landscape, with
background water use of between 10 and 12ML/ha.
In comparison, Photo B shows a modernised pump shed
driving a sub-surface drip irrigation system.
Photo A
INFORMATION MEMORANDUM  -  AUSTRALIAN FARMLANDS FUNDS  -  JUNE 2020
Targeting mid-system irrigation regions reduces physical
water delivery risk.
Photo A shows irrigation delivery channel upgrades for water
delivery security, while Photo B shows the channel after the
upgrade. Since 2009, Kilter Rural has redeveloped more than
75km of on-farm irrigation delivery channels and worked
with government and stakeholders on more than 12 water
connection projects to secure farm water delivery.
Photo B
This system delivers water use savings of up to 3ML/ha,
increased plant nutrient uptake of up to 25% and a reduction
in labour cost per hectare of up to 60%. It can be remotely
managed and automated, providing occupational, health
and safety advantages.
Photo B
39
CASE STUDY 4: Landscape regeneration

The Kilter Rural experience highlights that sustained
production with lower risk is achieved with a mix of intensive
agriculture on at least 70% of the land, with the remaining
landscape being deployed for ecosystem protection.
The Kilter Rural strategy has proven robust through
adverse events (droughts, floods) and systemic change
(hydrology and salinity) to deliver improvements in soil and
environmental asset condition.
Both are vital in underpinning long-term, high-value farm
production systems.
Environmental protection and remediation are key functions
of the Kilter Rural management system in irrigation
landscapes. More than 100,000 tree seedlings and 1000km
of direct tree seeding for landscape drainage management
and CO2 sequestration benefits has been established.

CASE STUDY 5: Ecosystem rehabilitation

Kilter Rural ensures that between 20-30% of each farmland Photo A shows a degraded lunette (a windblown area) at
aggregation is deployed to ecosystem protection, providing purchase in 2009. Photo B shows the same lunette in 2013
protective buffering from climatic events and/or system change. following rehabilitation through revegetation.
This helps build the long-term condition of key environmental
assets underpinning the farming system (pollination,
hydrology, water quality, soil quality and biodiversity).

Photo A Photo B

Kilter Rural assesses the inherent ability of a farming landscape

to deliver food and fibre within a broader environmental
envelope that underpins long-term sustainable production.

40
7.4 Managing price risk
Joint-venture company Wedgetail Food and Fibre was
launched in 2015 to develop processing and sales strategies
that add value to the crops grown by Kilter Rural.
Wedgetail CEO Richard Furphy and chairman Bruce Symons
bring experience, insights and networks developed during
three decades of work in the conventional and organic
food industry in both domestic and international markets.
Wedgetail has established annual offtake agreements (OTAs)
in excess of $17 million. These agreements provide ongoing
farm income surety that flow through to investor returns.
This expertise in production and post-farmgate processing
and marketing allows for maximum profitability capture
throughout the value chain, further enhancing investor returns.
The Funds’ gain the benefit of building upon OTAs already
established, where unmet demand for niche produce
lines is resulting in prices that are several multiples of the
conventional average. OTAs include supplying:
• 18,000 tonnes of organic milling wheat with Hakubaku,
a Japanese company established in 1941 and the
world’s largest processor of organic noodles.
• Organic barley to Carlton and United Breweries (CUB)
at four-times the 10-year average conventional price,
as exclusive supplier for its Pure Blonde Organic beer.
• 1600 tonnes of organic tomatoes, processed through
Kagome’s Australian plant in northern Victoria. Kagome is
a Japanese-based global company. Japanese consumers
have recently voted Kagome as the country’s most
trusted brand. Kilter Rural and Wedgetail have been
working with Kagome since 2016.
7.5 Exit strategy
Upon wind up, the Funds’ assets will be well suited to
investors seeking fully scaled, developed farmland and
water assets. The investment fundamentals currently
attracting both domestic and offshore capital into Australian
agriculture include:
• Uncorrelated returns provided by real assets.
• A long track record of farmland value growth.
• Globally competitive farm enterprises driven
by a low subsidy environment.
• Low sovereign risk.
• Availability of assets allowing for capital
deployment at scale, and
• Geographic proximity to large developing economies
with market access underpinned by bilateral free
trade agreements.
A geographic and sector spread of aggregations means
diversification in, and therefore choices of, what is
offered to the market. However, the focus is to target an
institutional-scaled investor seeking a large-scaled, turnkey
farming operation delivering high yielding quality produce,
ecosystem protection and carbon sequestration services.
Kilter Rural will consider the sale of an individual property
during the term of the Funds if it no longer meets the
strategy, or where investment capital can be better utilised.
A history of resilient earnings, across a geographically diverse
spread of fully developed operations will make the Funds an
attractive opportunity for both domestic and foreign capital.

Wedgetail collaborates with each partner to underpin both

supply chain and financial return.
Wedgetail has identified organic produce as a strategic
opportunity as it is a large and growing niche that commands a
premium. Kilter Rural’s track record of delivering upon current
OTAs has greatly assisted Wedgetail in developing exclusive
access for additional high-value produce offtake agreements.
As Kilter Rural increases the range and volume of the crops
it grows, Wedgetail will increasingly focus on opportunities
to add value through processing, selling into the premium
ingredient market and strategic partnerships.

INFORMATION MEMORANDUM  -  AUSTRALIAN FARMLANDS FUNDS  -  JUNE 2020 41

8 Financial returns

42
8.1 Performance update
The Funds have outperformed expectations to generate an annualised return of 3.17% since inception to 31 March 2020, while still
in a purchase and development phase.

Monthly performance (net of fees and expenses)

YEAR JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC YTD

2020 0.64 -1.01 -1.19 -1.56

2019 2.35 -0.28 -0.24 -0.30 -0.57 0.01 0.07 2.21 0.21 1.51 1.46 -0.01 6.56

2018 0.00 -0.23 -0.13 -0.36

Table 3: Projected investor IRR and elasticity when key variables are applied

SCENARIO LOW CASE BASE CASE HIGH CASE

INVESTOR IRR 7-10% 10-12% 13-15%

Key variables

Land capital growth 4.0% 6.50% 8.0%

Water capital growth 4.0% 6.50% 8.0%

Prices received (% deviation from 10-year average) -12% 100% +12%

Crop yields (% deviation from 10-year average) -5% 100% +5%

Notes to key variables:

• The 20-year average annual land value growth across all Australian farmland transactions is 6.6%.26
• The 20-year average annual land value growth across all Victorian and New South Wales farmland transactions is 6.6%
and 6.9% respectively.
• High reliability Water Entitlement (Goulburn) annual capital growth averaging 11.3% per annum from July 1994 to December 2019.27
• Low and high case price and yield variables are expressed as a percentage of the 10-year average modelled over the duration
of the Fund’s term.

Table 4: Outlines of projected investor capital deployment to December 2022 inclusive of land, development
and Water Entitlement purchases. This assumes capital raise close of December 2021

PROJECTED CAPITAL DEPLOYMENT AMOUNT DATE

Phase 1 (fully subscribed) $20m Oct 18

Phase 2 – $80m $100m Dec 20

Phase 3 – $100m $200m Jun 21

Phase 4 – $100m $300m Dec 22

  $300m  

The capital amounts and deployment dates are anticipated only. No guarantee or other representation is given that amount of
capital will be raised or deployed by the dates shown.

26 Australian Farmland Values 2018, a Rural Bank Report 2019.

27 Department of Agriculture and Water Resources: MDBA progress of Water Recovery as at 30 June 2017.

INFORMATION MEMORANDUM  -  AUSTRALIAN FARMLANDS FUNDS  -  JUNE 2020 43

9 Historical Kilter Rural returns

9.1 Kilter Rural’s 9.3 The Murray-Darling Basin

institutional mandate
Since 2006, Kilter Rural has managed a portfolio of land and
sMDB Water Entitlement on behalf of a leading Australian
institutional investor. As at 31 March 2020, the land and
water portfolio were valued at approximately $400 million.
Kilter Rural has operated the portfolio through some of the
most extreme climatic conditions on historic record in the
sMDB, namely the Millennium Drought, followed by the
two wettest years on record in the sMDB in 2010 and 2011.
These assets have delivered annualised returns of 9.5%
since inception to March 2020.
Balanced Water Fund
The Murray-Darling Basin Balanced Fund was created in
a partnership with The Nature Conservancy. A world-first
impact fund, the Murray-Darling Basin Balanced Water
Fund is the first water investment fund in Australia to
address balanced environmental, agricultural, social and
financial outcomes.
The Murray-Darling Basin Balanced Water Fund has
delivered annualised returns of 18.8%, annualised to
31 March 2020, since inception in December 2015.

9.2 Kilter Water Fund

The Kilter Water Fund invests in Australian water assets and
has delivered returns of 16.7%, annualised to 31 March 2020,
since inception in June 2014.

44
INFORMATION MEMORANDUM  -  AUSTRALIAN FARMLANDS FUNDS  -  JUNE 2020 45
10 The Funds’ structure and governance

10.1 Governance overview

Kilter Investments’ governance structure has been developed with a strong focus on compliance, with delegated authorities
and clear lines of reporting and decision-making.

Figure 14: Overview of roles and responsibilities for the Funds

KILTER INVESTMENTS
Fund Trustee

Governance KI Governance Administration

and Compliance Committee and Reporting

Australian Unit Register

Portfolio/Asset
Farmlands 10% One Registry Services
Manager
Operating
Kilter Rural
Fund
Fund Administrator
Unity Fund Services
Stapled Unit
Unit Trusts holders
Specialist Fund Auditor
Advice Morrows Audit

Investment Australian
Committee Farmlands 90%
Fund Valuations
Land: Colliers International
Water: Marsh Jacobs
Associates
Fund Custodian
Sandhurst
Trustees Ltd

Fund Assets

46
The Funds’ structure has the following main components:
• Trustee – Kilter Investments retains the AFSL and, as
Trustee of the Funds, is responsible for governing the
Funds in accordance with the terms of the Constitutions.
The law, financial services licensing regime and
regulations governing unregistered managed investment
schemes reinforce that the sole responsibility for the
operation of the Funds lies with Kilter Investments as
Trustee. Kilter Investments represents investor interests
by monitoring the implementation of the investment
strategy and exercising oversight of the appropriate
governance, risk, audit, compliance and reporting
frameworks for the Funds.
The Trustee has established a Governance Committee
as part of its corporate governance framework.
The Governance Committee’s principal role is to assist the
Kilter Investments board to fulfil its corporate governance
obligations, including its statutory, fiduciary, governance
and regulatory responsibilities as a corporate trustee
and AFS licensee by providing an objective nonexecutive
review of the effectiveness of Kilter Investment’s
corporate governance framework.
The Committee is also responsible for making
recommendations to the Kilter Investments board for
the ongoing development of its corporate governance
framework and to ensure its continuous improvement and
robustness in light of growth in funds under management.
• Custodian – Sandhurst Trustees Limited (ACN 004
030 737, Sandhurst) is a wholly-owned subsidiary of
Bendigo and Adelaide Bank. It acts as an independent
third party holding the Funds’ assets and acts as the
record keeper for transactions and holdings, reporting
on holdings and trades for the Funds in accordance with
a custodian agreement. A summary of the custodian
agreement is provided in Section 10.5.
• Portfolio Manager – The Trustee engages Kilter Pty
Ltd (trading as Kilter Rural) via a portfolio management
agreement and an asset management agreement to
be the portfolio manager and asset manager of the
Australian Farmlands Fund and the Australian Farmlands
Operating Fund respectively. Under these agreements
Kilter Rural implements investment decisions, the
acquisition of farmland and Water Entitlements, the
generation of operating income in line with the investment
strategy and provides the Funds’ accounting services.
Kilter Rural has established a specialist Investment
Committee, which solely advises Kilter Rural
on the investment process and the evaluation of
potential investment opportunities prior to seeking
Trustee consideration.
INFORMATION MEMORANDUM  -  AUSTRALIAN FARMLANDS FUNDS  -  JUNE 2020
• Administrator – Unity Fund Services Pty Limited (ACN
146 747 122, Administrator) has been appointed by the
Trustee as the Funds’ Administrator pursuant to the terms
of an administration agreement. The Funds’ Administrator
provides specialist fund administration services for the
Funds, including preparation of the NAV and keeping
financial records. The Funds’ Administrator receives a
fee calculated in accordance with the schedule of fees
set out in the administration agreement and is entitled to
be reimbursed for all out-of-pocket expenses properly
incurred in performing its duties.
• Registry Services – One Registry Services Pty Limited
(ABN 69 141 757 360, Registrar) has been appointed
by the Trustee as the Funds’ Registrar pursuant to the
terms of a registry agreement. The Funds’ Registrar acts
as the unit registrar and unit transfer agent and performs
other administrative tasks for the Funds as required. One
Registry receives a fee in accordance with the fees set
out in the registry agreement.
• Auditor – Morrow’s Audit (ABN 18 626 582 232)
has been appointed by the Trustee to audit the Funds’
financial statements.
• Valuer – The Funds’ portfolio of Water Entitlements is
independently valued on a monthly basis by Marsden
Jacob Associates Pty Ltd (ACN 072 233 204) (or
such other valuer as determined by the Trustee), an
independent economic, policy and strategy consulting firm.
The Funds’ portfolio of land is valued on an annual basis by
Colliers International or such other valuer as determined by
the Trustee.
10.2 Kilter Investments’
board and management
Kilter Investments’ board members have extensive
experience in governance, compliance, investment finance
and risk management. Members of the Kilter Investments
board together with a brief summary of their experience
are listed in Table 5.
10.3 Kilter Rural management
The Kilter Rural investment and management team has
experience that is unsurpassed in longevity and scale in
successfully generating returns through farmland and water
investments in the sMDB.
Kilter Rural’s farmland and water management team,
established more than 15 years ago, contains experts in
farmland development, water, finance and farm operations.
Summary details for key personnel engaged in the delivery
of management services to the Funds are set out in Table 1
in Section 2.5.
47
Table 5: Kilter Investments Pty Ltd – Key People
Chair/Non-Executive
Director
ROBERT (BOB) WELSH
Melbourne
Bob’s career in the finance
and superannuation industries
began in 1971. For 10 years
to 1999 Bob was the chief
executive of the Victorian
Superannuation Board and
from 1999 to 2010 chief
executive of VicSuper.
Bob was appointed to
the Kilter Investments
board in 2012. He is also a
member of the Governance
Committee and brings
a lifetime of governance
and compliance experience
to Kilter Investments.
48
Non-Executive Director
HENRIETTE STRAIN
Melbourne
Henriette has extensive
experience as a corporate
lawyer and senior executive
in the financial services sector
specialising in governance,
investment, compliance
and risk management.
Henriette’s previous roles
include 11 years as general
counsel and company
secretary of VicSuper.
Henriette joined the Kilter
Investments board in 2015
and has been the Chair of
the Governance Committee
since 2019.
Executive Director,
AFSL Responsible
Manager and CEO
CULLEN GUNN
Melbourne and Bendigo
Since the late 1980s Cullen
has dedicated his working
life to advancing sustainable
farmland, water and ecosystem
management in Australia.
Long-term exposure to the
investment needs of Australian
landscapes prompted a desire
to attract institutional scaled
investment into sustainably
managed landscapes.
He is a director of Accounting
for Nature, a not-for-profit
company with a vision to be
a recognised global leader
for measuring changes in the
health of the environment.
Cullen is a founding director
of Kilter Rural and has been
overseeing its investment
portfolios since 2006.
Company Secretary,
Compliance, AFSL
Training Officer and AFSL
Responsible Manager
ANITA BUTTERS
Melbourne and Bendigo
Anita has more than 25
years’ experience in financial
management and governance
in agricultural and natural
resource management.
Anita has been working
in Kilter Rural since its
inception in 2004, leading
implementation of quality
assurance, compliance and
governance processes.
10.4 Quality assurance 10.6 The custodian agreement
Kilter Investments has appointed Kilter Rural as manager Sandhurst Trustees has been appointed by Kilter Investments
of the Funds. Kilter Rural discharges investment and asset to act as custodian for the Funds pursuant to a custodian
management activities within the framework of its accredited agreement. In accordance with the terms of the custodian
Quality Management System (QMS). agreement, Sandhurst Trustees acts as an independent third
party holding the Funds’ assets, acts as the record keeper
Kilter Rural operates its QMS in compliance with the
for transactions and holdings, and reports on holdings and
requirements of ISO 9001:20015. Original ISO certification
trades for the Funds.
took place on 28 April 2010 with a successful recertification
audit confirmed on 14 February 2020. This safekeeping role keeps the Funds’ assets separate
from the balance sheets of third-party trustees such as
A surveillance audit is undertaken on an annual basis.
Kilter Investments. The custodian does not influence,
The QMS consists of policies, procedures and work
nor is accountable for, an individual consumer’s choice
instructions that guide all activities within the business
of fund, the Funds’ choice of portfolio and asset manager,
to manage risk exposure and to ensure compliance with
the portfolio and asset manager’s investment approach,
regulatory and client requirements.
nor the Funds’ decision to hold a particular asset or
participate in a particular market.
10.5 AFSL
Kilter Investments holds an AFSL (AFSL 41412) for its
own wholesale managed investment schemes which also
permits it to deal in derivatives associated with water and
water products for consumptive and environmental use.
An AFSL is issued by ASIC and licence holders must satisfy
the conditions of the licence at all times. Kilter Investments
has in place policies and procedures to ensure that
this occurs, including a process for the appointment,
training and monitoring of its responsible managers and
authorised representatives.

INFORMATION MEMORANDUM  -  AUSTRALIAN FARMLANDS FUNDS  -  JUNE 2020 49

11 Key risks

Investors should carefully consider the risks before making an application

to invest in the Funds. The following list of risk factors is not exhaustive. In
light of these risks, no guarantee is or can be given by the Trustee or by any
person involved with the proposed investment that returns will be similar to
those discussed in this IM or that funds invested will be returned. Investors
should carefully read and understand the following risks in relation to the
Funds (and obtain independent professional advice, if required), along with
other information detailed in this IM. The Trustee and Kilter Rural as the Funds’
manager have taken the risks outlined into account and have developed both
strategic and operational plans accordingly.

50
11.1 Risks associated with
investing in farmland,
ecosystem and water assets
Counter-party
Counter-parties to agreements with the Funds may not
perform their obligations under those agreements. This
could adversely affect the performance of the Funds.
Competition
Changes in global commodity markets may adversely
affect operating returns to the Funds which may have a
material adverse effect on returns to Investors. Competition
in the form of new technologies, new crop varieties and
international trade may affect the operating performance
of the Funds. Additionally, there is a risk that the price of
farmland and water may increase significantly prior to full
deployment of the Funds’ capital. This may reduce potential
returns for Investors in the Funds.
Settlement risk
Farmland and water asset transactions may not reach settlement
for a number of reasons, including counterparty default
due to adverse changes in economic conditions, seasonal
conditions and/or the legal and regulatory environment.
Climate change
Human-induced climate change may challenge the thesis
for investment in Australian farmland, water and ecosystems.
The Funds will target high water security irrigation zones
within south-east Australia. While this area may be
affected adversely by the impacts of climate change it is
geographically large enough to permit risk mitigation through
investing in a diversity of sites and Water Entitlements from
different regions. Irrigation technologies and farm layout
are designed to cope with periods of very wet and very
dry. Carbon liability and offset activities will be presented
annually to Kilter Investments within the framework for
environmental accounts.
Degradation of farmland assets
It is possible that through poor management, neglect and
or inability to consistently monitor their condition that
farmland assets within the Funds may suffer environmental
degradation. This risk will be mitigated through the annual
submission to Kilter Investments of environmental condition
accounts, which are used for annual comparisons of farmland
condition starting with a condition reference point and the
condition benchmark health at purchase (see Section 6.6
for overview).
Supply and demand
Farmland and water supply and demand may be affected
by seasonal conditions, including periods of drought, high
rainfall and flooding. These seasonal conditions may change
farmland and water supply and demand which, in turn, may
affect the price of farmland and water assets over the short
term or long term.
INFORMATION MEMORANDUM  -  AUSTRALIAN FARMLANDS FUNDS  -  JUNE 2020
Thinly-traded water assets
Relative to some more traditional investments, sMDB water
assets are thinly traded. Consequently, it can be difficult
for Kilter Rural to value the water assets with precision.
To address this risk, the Funds have appointed Marsden
Jacob, an independent valuer, to value the Funds’ water
assets on a monthly basis. Marsden Jacob’s valuations will
be subject to certain assumptions and factors and Investors
will need to make their own assessment of the adequacy
of those valuations.
Government involvement in water markets
The Funds’ opportunity to acquire Water Entitlements
at reasonable valuations may be compromised by the
Commonwealth Government’s water acquisition program
which is aimed at increasing environmental water flows
in the Murray-Darling Basin.
The government’s acquisition of water has resulted in fewer
Water Entitlements and may decrease the availability of
these assets at reasonable valuations. Furthermore, once
the Funds have acquired more Water Entitlements, there is
a risk that the value of those entitlements could be impacted
if the Commonwealth elects to supply and sell substantial
Water Allocation derived from its holdings.
Loss of carry-over
Water Allocation may be carried over from one irrigation year
to the next to be used (or sold) in the subsequent irrigation
year. Kilter Rural may elect to use this strategy when Water
Allocation prices are low in an irrigation year due to excessive
over-supply (i.e. during a wet or very wet year). There is a risk
that Water Allocation carried over may be cancelled with no
income to the Funds. The circumstances in which this could
occur vary based on the differing carry-over rules associated
with each class of Water Entitlement. However, in general,
loss of carry-over occurs when the allocation percentage in
the subsequent year plus the carry-over percentage exceeds
100% and the water storage associated with a class of
Water Entitlement becomes full and spills.
Development risk
The Funds may, in certain circumstances, be exposed to
development risk as a result of capital improvements and
development activities on its properties. These activities
may adversely affect planned budgets which, in turn, may
adversely affect Investor returns.
Natural disaster and seasonal risk
Through the operation of farmland and water assets
the Funds may be exposed to natural events and other
environmental issues which may adversely impact the
assets held in the funds.
Market risk
The value of assets in the Funds and operating returns may
increase or decrease depending on market, environmental,
economic, political, regulatory and other factors affecting
the investment strategy.
51
11.2 Risks associated with
investing in the Funds
Legal, tax and regulatory risk
There is a risk that there could be significant changes in the
legal, tax and regulatory environment affecting the Funds
at either or both the Commonwealth and State Government
levels. Such changes could materially and adversely affect the
Funds and their operations as well as the liquidity of the Funds’
assets. Such changes are not predictable, nor are their effects.
Liquidity risk
The liquidity in the Australian farmland and water market
fluctuates. Kilter Rural will leverage upon its extensive
network to source farmland and water assets not publicly
listed for sale. However, the availability of assets for purchase
may be affected by seasonal conditions which may, in turn,
affect the ability to purchase farmland and water assets.
Additionally, these factors may adversely affect the Funds’
ability to sell assets upon wind up of the Funds.
Lack of diversification
There is a risk that the Funds might, at particular times, be
overweight in certain types of water and farmland assets.
In addressing this risk, Kilter Rural diversifies the Funds’
portfolio across the different types and classes of sMDB
farmland and water assets in a manner consistent with
the Funds’ investment strategy. However, following the
investment or redemption of capital, the Funds’ portfolio may
be more concentrated in particular types of assets. This lack
of diversification, should it occur, may negatively affect the
Funds’ NAV and cause losses to the Funds.
Fund size risk
There is no assurance that the Funds will raise the capital
required to meet the target returns expected.
Dependence on Kilter Rural
The Funds’ performance is to a large extent driven by Kilter
Rural and its ability to develop, implement and adaptively
manage strategies that respond to changing market conditions
so that it can achieve the Funds’ investment objectives.
Kilter Rural’s ability to execute timely transactions at prices
that maximise value for the Funds will also affect returns.
Actions taken, or not taken, by Kilter Rural could cause the
Funds to incur losses or miss investment opportunities.
52
Key person risk
There is no assurance that the key personnel and officers
of the Trustee or Kilter Rural will continue to be involved in
the Funds’ investment activities (as applicable). Under the
terms of the Portfolio Management Agreement and the Asset
Management Agreement the Trustee has certain rights of
review if certain key employees cease to be employed by
Kilter Rural. Kilter Rural may be replaced as manager if it is
unable to demonstrate an ongoing capability.
Conflict of interest risk
Kilter Rural’s oversight of different client accounts may
subject Kilter Rural to various conflicts of interest. In addition,
the Portfolio Manager, its affiliates, and its principals
may have investments in other funds or interests in the
performance of other client accounts which pose conflicts of
interest. Kilter Rural has developed a policy framework that
will be applied to resolve conflicts with respect to investment
opportunities in a manner that it deems equitable to the
extent possible under the prevailing facts and circumstances
and in accordance with applicable law.
Conflicts of interest between
Trustee and Investment Manager
Conflicts of interest may arise because the Trustee and Kilter
Rural are related entities and may have other business dealings
with each other. The Trustee has an established policy to
manage conflicts that arise. Kilter Investments and Kilter Rural
are concurrently working to deliver two other water portfolio
investments, and may become involved in subsequent portfolio
investment management, which may lead to conflicts of interest.
Lack of investor control
Investors have no opportunity to control the day-to-day
operation of the Funds. This includes considering, evaluating and
making investment and management decisions for the Funds.
Dilution risk
As the Funds issue new units to investors, the proportional
beneficial ownership of existing unit holders in the underlying
assets of the Funds may be reduced.
COVID-19
Any number of unknown risks may arise as a result of the
current COVID-19 pandemic, which may adversely impact
the Funds and returns to Investors.
12 Details of the Offer
12.1 The Offer
Pursuant to the Offer, Investors are invited to apply for units
in the Funds.
12.2 Unit price and
minimum investment
Unit prices are calculated in accordance with the Funds’
Constitutions. The unit price will be determined in the month
in which the funds to be invested are received, along with a
completed Application Form. In the event that the funds and
completed application forms are received in different months,
the later date will apply.
Capital has been raised and deployed in farmland
development projects which will take time to reach maturity.
The time it takes for any project to reach maturity means that
in the Trustee’s experience the development costs invested in
the land will not be reflected in an increased land value until
the project reaches maturity.
It is difficult to measure the increase in value at regular
intervals, however in the absence of any adjustment,
Investors who contribute later in a project’s development
are potentially advantaged because the risks associated
with developing a project are higher at the beginning. Later
investors are closer to realising the increase in value which
comes to fruition when the development is complete and the
project is mature.
INFORMATION MEMORANDUM  -  AUSTRALIAN FARMLANDS FUNDS  -  JUNE 2020
Given this, when calculating the issue price of units, the
Trustee will apply a ‘buy factor’ to the NAV to reflect
the reduced risk associated with later investment. As such,
the unit issue price for each month will be determined
as the NAV per unit with the addition of a 3% buy factor.
The NAV for each month will be determined using a monthly
independent valuation of the water assets and a land value,
pending adjustment to the actual valuation provided by an
independent valuer at 30 June each year.
The Trustee also reserves the right to determine at its
absolute discretion a revised unit price where the Trustee is
aware of a material circumstance or event that would make
the unit price calculated in accordance with the policy above
unfair or unreasonable. In the event that the Trustee intends
to employ this discretion, incoming investors who have
lodged applications and have not yet been issued units will
be contacted and informed of the revised unit price to be
applied to their application and given the opportunity to either
proceed with the application or withdraw the application.
The current unit price can be obtained by contacting the Trustee.
The minimum application amount is $100,000 or lesser amounts
as determined by the Trustee and $10,000 for subsequent
applications or a lesser amount as determined by the Trustee.
53
12.3 The size of the Funds It is important to note that the redemption price is not
the unit price at the time the redemption request is made.
The Funds will not be capped, however they are not expected The redemption price of units will be determined by the
to exceed $300 million. Capital raising is subject to certain Trustee, but it is expected to be based on the NAV of the
limitations as set out in Section 15.11. Funds’ at the end of the month preceding the date on
which the redemption request is approved by the Trustee
for settlement, less a 2.5% sell spread.
12.4 Target returns The sell spread aims to ensure that the redeeming Investor
The Funds’ target is to achieve returns in a range of bears the transaction charges and other costs associated
10% and 12% per annum (after fees and before tax).28 with their decision to exit the Funds. The sell spread is an
estimate of potential costs that may arise when restructuring
Target returns are expected to be comprised of capital
or selling assets including, but not limited to, legal costs,
growth in the Funds’ lands and Water Entitlements, as well
brokerage, government charges and taxes. The sell spread
as net income generated by the portfolio after meeting the
is not an additional fee paid to Kilter Rural.
Funds’ operating costs.
Target returns are not guaranteed and may be affected
by a number of factors, including the risk factors set out 12.6 Transfers
in Section 11.
There will not be any established secondary market for the
sale of units. If you want to sell your units to an existing
12.5 Redemptions Investor or a third party Wholesale Investor or Sophisticated
Investor, then you may endeavour to do so. You can negotiate
The anticipated life of the Funds is 10 years from when and agree a price for your units with the prospective buyer.
Phase 1 was fully subscribed in October 2018 and as The Trustee may, at its discretion, refuse to register any
such any investment should be considered long term and transfer of units.
illiquid. However, the Trustee will after the expiry of an initial
three-year ‘lock up’ period for each Investor (from the date
of issue of units to that Investor) and the addition of a further 12.7 Distributions
12-months’ notice, consider approval of redemption requests
The Australian Farmlands Fund will distribute its taxable
at the next six monthly redemption window. Redemption
income each year. This is in line with this entity being
windows are envisaged for March and September annually.
a ‘flow through’ entity for income tax purposes.
In the event that an Investor makes a redemption request, the
The Australian Farmlands Operating Fund will be taxed as an
Trustee will decide whether such a request will be accepted
operational business (i.e. ‘company’) and distributions will be
on the basis that it does not disadvantage the Funds or other
declared by the Trustee in accordance with the distribution
Investors. In the event that the Trustee reasonably believes
provisions of the Constitution. The Trustee will also make a
the redemption request will disadvantage the Funds or other
decision on the extent to which these distributions will be
Investors then the redemption request will be declined. Key
franked. This will primarily be determined by the availability
factors in the assessment of redemption requests will be the
of franking credits.
cashflow position of the Funds and the level of outstanding
redemption requests. Distributions will be based on the number of units held at
the date of distribution and paid by bank transfer directly to
Each redemption request will be considered against a
the investor’s nominated bank account. No distribution is
maximum limit for outstanding redemptions requests of
guaranteed, and the amount paid is dependent upon a number
10% of the total units on issue in the Funds. Where the total
of factors, including the risks disclosed in this IM.
redemption requests exceed 10% of the total units on issue,
the Trustee may pro-rata those redemption requests relative to
each redemption requests proportion of the total redemption
requests outstanding. The Trustee may defer consideration of
any unmet portion of a redemption request until the following
year or such other time as the Trustee determines.
If the Trustee accepts a redemption request, the Trustee
will use reasonable endeavours to facilitate that redemption
request by using any ‘excess cash’ available to the Funds.
Excess cash will be derived from the operational cashflow,
any additional capital raised or the sale of assets consistent
with the investment strategy.

28 Potential investors should note that past performance is not an indicator of future performance. There can be no guarantee that historical levels of capital
appreciation of Water Entitlements will occur in the future. Furthermore, there is no guarantee that investment yields which have occurred previously will
be maintained in the future.

54
12.8 Term of the Funds 12.9 Interest in the Funds
The initial term of the Funds is fixed at 10 years, from when Investment in the Funds will be represented by units being
Phase 1 was fully subscribed in October 2018. However, the issued to Investors. The ratio of units that will exist between
Trustee may extend the term beyond the Funds’ initial 10-year the two stapled trusts will be nine units in the Australian
term if it reasonably considers the extension is in the best Farmlands Fund to every one unit in the Australian Farmlands
interests of Investors, or is necessary or desirable (but only Operating Fund.
by up to six months).
By way of example, an investment of $100,000 at the unit
The Trustee must wind-up the Funds or cause the Funds price of $1.00 would result in 90,000 units in the Australian
to be wound up in any of the following circumstances: Farmlands Fund and 10,000 units in the Australian Farmlands
Operating Fund.
• Investor initiated: At any time after the seventh
anniversary of the commencement of the Funds, Each unit represents a proportional interest in the underlying
Investors may request the Trustee to call and hold a value of the net assets of the relevant trust.
meeting for the purposes of the Investors considering
whether they want to terminate the Funds before the
end of their initial 10-year terms.
• Trustee initiated: If at any time after the seventh
anniversary of the commencement of the Funds, the
Trustee considers it is in the best interests of Investors to
terminate the Funds before the end of their initial 10-year
terms, then the Trustee may call and hold a meeting of
Investors for them to consider whether they want the
terms to end earlier.
• Early termination: If at any time during the first
seven years of the commencement of the Funds, the
Trustee considers it is in the best interests of Investors
to terminate the Funds, then the Trustee may call
and hold a meeting of Investors for them to consider
whether they want the Funds to be terminated.

INFORMATION MEMORANDUM  -  AUSTRALIAN FARMLANDS FUNDS  -  JUNE 2020 55

13 Fees and costs

13.1 Amounts
This section shows fees and other costs that may be charged to the Funds. You should read all information about fees and costs
as it is important to understand their impact on the Funds and potential returns to you.

FEE AMOUNT HOW AND WHEN PAID

Management Fee 1.15% of the NAV of the Funds’. Payable to Kilter Rural as the manager, monthly
out of the assets of the Funds based on the NAV
of the Funds at the end of the relevant month.

Trustee Fee 0.35% of the NAV of the Funds’. Payable to the Trustee monthly out of the assets
of the Funds, based on the NAV of the Funds
at the end of the relevant month.

Grant Fee 10% of the value of all co-investment grants Payable to Kilter Rural as the manager, out of
and or natural capital, ecosystem service and the assets of the Funds in the month following
environmental protection payments. the receipt of grant funds.

Performance Fee A performance fee will be payable by If payable, this fee is paid by the Funds to
the Funds on the 10th anniversary of the Kilter Rural as the manager, out of the assets
Funds’ establishment calculated as 15% of the Funds on the fifth and 10th anniversaries
of pre-tax returns (net of management fees of the Funds.
and costs) above a performance hurdle of
8%. The manager is entitled to receive half
of its performance fee on the fifth anniversary
of the Funds’ establishment (assuming the
Funds’ performance for the period exceeds
the performance hurdle).

13.2 Goods and Services 13.4 Expenses

Tax (GST) The Trustee is entitled to be paid or reimbursed for expenses
associated with the operation of the Funds, such as the
Unless otherwise stated, all fees quoted in the IM are quoted custodian’s fees, transaction costs in acquiring the Funds’
exclusive of GST. assets, the Funds’ administration, legal, accounting and audit
fees in respect of the Funds and other expenses properly
incurred in connection with performing its duties and
13.3 Waiver or deferral of fees obligations in the day-to-day management of the Funds.
The Trustee may, in its absolute discretion, accept lower fees
than it is entitled to receive, or it may defer payment of these
fees at any time.

56
14 Taxation

The following comments are a general summary only of the taxation matters
applicable to the Funds and to Australian resident Investors for income tax
purposes. The comments are based on information that is current at the date
of issue of this IM. There are tax implications that arise when investing in the
Funds, about which we do not provide advice. Due to the complex and fluid
nature of the Australian taxation regime you should obtain professional advice
regarding your own circumstances before making an investment decision.

INFORMATION MEMORANDUM  -  AUSTRALIAN FARMLANDS FUNDS  -  JUNE 2020 57

14.1 Taxation of the Funds 14.3 Income tax
An investment in the Funds is an investment in two You will be assessed on your share of the net taxable
underlying trusts, these being the Australian Farmlands Fund income of the Funds to which you are entitled for a particular
and the Australian Farmlands Operating Fund. These two income year.
trusts are legally and permanently linked in what is often
described as a ‘stapled’ unit trust structure. Total investment
funds received will be allocated to the two trusts on the basis 14.4 Capital Gains Tax (CGT)
of 90% to the Australian Farmlands Fund and 10% to the
The disposal of units, either by withdrawing or transferring
Australian Farmlands Operating Fund. The purpose of this
your investment, may lead to a CGT liability for you on any
structure is to separate the ownership of assets from the
gain made. If the units were owned for at least 12 months
trading operations of the farming enterprise. This structure
by an individual, trust or complying superannuation entity
will result in different tax implications for each of the trusts. 
and the Funds and an Investor satisfies certain other
The trusts are Australian residents for income tax purposes. requirements then the 50% CGT discount should be available
As such, they are required to determine net taxable income to that Investor in respect of any capital gain made on the
each income year.  disposal of the units.
The Trustee plans to distribute all the net taxable income for However, if an Investor is carrying on a business which
the Australian Farmlands Fund (after deducting expenses involves trading in units they may be liable to pay tax on
including management costs) to Investors each financial any gains made on the disposal of units as ordinary income
year with the intention that this income will be taxed in the (that is, without the benefit of a 50% tax discount).
hands of Investors rather than the Fund being taxed. It is also
Any capital losses on the disposal of units may be able
intended that the Australian Farmlands Fund will distribute
to be offset against capital gains arising in that year or in
all net realised gains (if any) to Investors as part of the
subsequent years.
annual distribution. The distributable income may include
non-assessable amounts to Investors, receipt of which
may have capital gains tax consequences.  
14.5 Current tax trust reforms
The Australian Farmlands Operating Fund is expected to be
taxed as a trading trust in accordance with corporate tax The Australian Government is in the process of developing
regulations. Accordingly, the Trustee will declare distributions new trust tax reforms. The main focus of the trust tax reforms
where considered appropriate and such distributions may be are the:
franked to the extent that franking credits are available.  • Definition of fixed trusts, and the
• Taxation of trust income.
14.2 Taxation of Investors The proposed changes are not expected to have a significant
impact on the Funds. However, if the proposed changes do
At the end of the Funds’ financial year, Investors will receive
have a significant impact, Investors will be advised by the
a tax statement to help complete your tax return. The tax
Trustee of the Funds.
statement will show the taxable amount of distributions
(if any) to which you are entitled, and the taxable amount
distributed should be included in your assessable income
for the year in which the distribution was made. 14.6 Duty on issue or
Distributions of non-assessable amounts (typically referred transfer of units
to as tax deferred amounts) are generally not subject to The Funds will be liable to pay stamp duty on the acquisition
tax. This may arise where the Funds’ distributable income of the underlying assets. In addition, under certain State
is higher than its taxable net income. Although the receipt of legislation, there may be a requirement for certain Investors
non-assessable amounts are generally not subject to tax, the to pay duty on the transfer or issue of new units, where the
receipt of certain non-assessable amounts may have capital underlying assets are property and certain other conditions
gains tax consequences. Broadly, the receipt of certain are met.  It is intended that the Funds will make an application
non-assessable amounts may reduce the cost base of the for registration as a declared public unit trust once the
Investor’s investment in the Funds. If the cost base reduces required distribution of unitholders is met, which would likely
to zero, any additional non-assessable receipts may give rise see the Funds exempt from the application of this duty.
to an immediately taxable capital gain. If the cost base is not
reduced to zero, the reduction to the cost base may result
in either an increased capital gain or a reduced capital loss
on the subsequent disposal of the units in the Funds.
All tax liability on distributions, dividends and on withdrawals
from the Funds rests with Investors and therefore the Trustee
recommends you seek professional advice prior to investing
in the Funds.

58
15 Additional information

15.1 Constitutions
The Constitutions of the Australian Farmlands Fund and the Australian
Farmlands Operating Fund (Constitutions) are the primary documents governing
the relationship between the Investors and the Trustee. The Constitutions
are dated 23 August 2018 and contain extensive provisions about the legal
obligations of the parties and the rights and powers of each.

The key terms of the Constitutions:

• Under the Constitutions, the Trustee is granted
a broad range of powers in relation to the Funds,
including the power to invest and deal with
investments as if it was the sole beneficial owner.
• Investors are entitled to receive notice of, and to
attend and vote at, a general meeting of the Funds
and to receive all notices and any other documents
required to be sent to Investors under the
Constitutions. Each Investor present in person or
by an attorney, representative or proxy at a general
meeting has one vote on a show of hands and,
should a poll be called, one vote for each unit held.
• The Trustee may, on behalf of the Funds, issue
further units at such issue price it determines.
• Units may be transferred by a written document.
However, the Trustee may refuse to register any
transfer of units, in its absolute discretion.
• If the Funds are wound up, Investors will be
entitled to the net proceeds of realisation in
the Funds, following payment of any liabilities
or costs owed by the Funds. The proceeds will
be distributed to each Investor in accordance with
the percentage the units they hold bears to the
total units on issue.
• The Trustee, a related company, or an associate of
the Trustee, may hold units in the Funds. Further,
the Trustee has the power to contract with itself,
in its personal capacity and with related entities.
• The Trustee is indemnified out of the assets
of the Funds against any liability incurred in
exercising its power under the Constitutions
and for all costs and expenses properly incurred
in connection with the Funds.

INFORMATION MEMORANDUM  -  AUSTRALIAN FARMLANDS FUNDS  -  JUNE 2020 59

60
15.2 No underwriting or listing
The Offer is not underwritten and there is no current
intention to apply to list the Funds on a securities exchange.
15.3 Anti-Money Laundering and
Counter Terrorism Financing
Act (AML/CTF)
The Anti-Money Laundering and Counter-Terrorism Financing
Act 2006 (Cth) requires the Trustee to verify prospective
Investor’s identity prior to accepting their investment. Investors
will be required to provide the identification information
set out in the Application Form. The Trustee will not issue
an applicant with units unless satisfactory identification
documents are provided. In some circumstances, the Trustee
may need to re-verify this information.
The Trustee may need to obtain additional information and
documentation from you when undertaking transactions in
relation to your investment.
By applying for Units, you agree to the conditions listed below:
a. You will supply, or procure the supply of, any
documentation and other evidence and perform any acts
to enable the Trustee to comply with the AML/CTF laws.
b. If the Trustee suspects that you are in breach of the
AML/CTF laws applicable in Australia or elsewhere,
or believes it is required to take action under any
laws relating to AML/CTF or any other applicable law
in Australia or elsewhere, it may take any action it
considers appropriate, including transferring your Units
and refusing or ceasing to provide you with services, in
order to comply with any laws relating to the AML/CTF
laws or any request of a relevant authority.
c. The Trustee may, in its absolute discretion, with or
without notice to you, disclose or otherwise report
the details of any transaction or activity, or proposed
transaction or activity, in relation to the Fund (including
any personal information, as defined in The Privacy Act
1988 (Cth) (Privacy Act) that you may have provided
to it) to any reporting body authorised to accept reports
under any laws relating to the AML/CTF laws applicable
in Australia or elsewhere.
15.4 Privacy
The Privacy Act governs the use of an individual’s personal
information gained by an organisation from dealings with the
individual. The Australian Privacy Principles laid out in the
Privacy Act govern the way in which organisations should
treat personal information.
The Trustee is committed to managing and only using
personal information in ways that comply with the Privacy
Act. As a result, the Trustee will apply the Australian Privacy
Principles in respect of all information provided by Investors
in making the application for investment in the Fund.
INFORMATION MEMORANDUM  -  AUSTRALIAN FARMLANDS FUNDS  -  JUNE 2020
The information the Trustee obtains from Investors on the
Application Form is used to evaluate applications, as well as to
issue and manage units in the Fund. The Trustee will retain the
information provided for record-keeping purposes. However,
once personal information is no longer required, the Trustee
will either destroy it, or retain it in a way that does not identify
that it relates to a specific Investor.
Investors have a right to know the information the Trustee holds
and to require the Trustee to correct any errors. In this regard an
Investor can assist the Trustee to keep its details up to date by
advising the Trustee of any information that appears incorrect.
Investors can telephone the Trustee on 61+ 03 5444 0112 or
write to the Trustee at PO Box 2010 Bendigo DC, Victoria 3554
Australia to obtain details about the information the Trustee holds.
As well as reporting to Investors about investments, the
Trustee may use Investors’ contact details to let them know
about other investment opportunities. If an Investor prefers
not to receive these communications, then please advise the
Trustee using the contact details referred to above.
If the Trustee is obliged to do so by law, the Trustee will
pass Investors’ personal information to other parties strictly
in accordance with the relevant legal requirements.
15.5 Foreign Account Tax
Compliance Act (FATCA)
and Common Reporting
Standard (CRS)
FATCA is United States (US) tax legislation that enables
the US Internal Revenue Service (IRS) to identify and collect
tax from US residents that invest in assets through
non-US entities. If you are a US resident for tax purposes,
you should note that the Funds are expected to be a ‘Foreign
Financial Institution’ under FATCA. The Trustee intends to
comply with its FATCA obligations, as determined by either
the FATCA regulations or any inter-governmental agreement
(IGA) entered into by Australia and the US for the purposes
of implementing FATCA. Under these obligations, the Funds
will have to obtain and disclose information about certain
Investors to the Australian Taxation Office (ATO). In order for
the Funds to comply with its obligations, the Trustee will also
request that you provide certain information about yourself,
including your US Taxpayer Identification Number (TIN).
The Trustee will only use such information for this purpose
from the date the Funds are required to do so.
The Funds are also required to separately collect and report
financial account information for all non-resident Investors and
certain entities with non-resident controlling persons under
the CRS to the ATO. The CRS is the single global standard
for the collection, reporting and exchange of financial account
information of non-residents, which applies to calendar
years ending after 1 July 2017. Under CRS, the Funds may
need to collect and report financial account information
of non-residents to the ATO. The ATO may exchange this
information with the participating foreign tax authorities of those
non-residents. To assist us in complying with these obligations,
the Trustee may request certain information from you.
61
15.6 Disclosures of interests
No expert or any firm in which any expert is a partner,
has any interest in the Offer referred to in this IM, and no
amounts have been paid or agreed to be paid (other than
normal fees) to any expert or any firm in which they are a
partner, for services rendered by the expert or the firm in
connection with the offer under this IM.
15.7 Registry
The Funds’ registry will be managed by One Registry
Services. The Fund’s Registrar acts as the unit registrar and
unit transfer agent and performs other administrative tasks
for the Funds’ as required. One Registry receives a fee in
accordance with the fees set out in the registry agreement.
15.8 Complaints handling
Investors have a right to complain if they are not satisfied
with the Trustee’s performance as Trustee for the Funds.
All complaints will be taken seriously, and the Trustee will
provide any Investor with a copy of the policy for handling
complaints on request and at no charge.
If the Investor has a complaint, then he/she/it should notify
the Trustee in writing (but please note the right to lodge a
complaint from the outset with the external dispute resolution
scheme below of which the Trustee is a member). Once
a complaint is made, the Trustee will acknowledge the
complaint within five Business Days and will provide a written
response as soon as practicable, but no later than 45 days
from receipt.
If a satisfactory resolution cannot be reached, then an
Investor may lodge their complaint with the Australian
Financial Complaints Authority. The contact details of
Australian Financial Complaints Authority are provided below.
GPO Box 3
Melbourne VIC 3001
Australia
T: 1800 931 678
F: +61 3 9613 6399
E: info@afca.org.au
Please note that a complaint is not required to go through
the Trustee’s complaint handling process before it can be
referred to the Australian Financial Complaints Authority.
62
15.9 Directors’ interests, Trustee
and related party disclosure
Kilter Rural is a related party of the Trustee. The fees payable
to Kilter Rural are set out in this IM.
Each of Kilter Rural’s directors is a shareholder in Kilter Rural.
In addition, one of Kilter Rural’s directors is also a director of
the Trustee.
Wedgetail Food and Fibre Pty Ltd is 50% owned by Kilter
Rural and therefore is a related entity.
Directors and employees of both the Trustee and Kilter Rural
may subscribe for units in the Funds.
15.10 Communicating
with Investors
Investors will be provided with the following information
electronically:
• A monthly report summarising the Funds’ performance,
NAV and activities.
• A distribution statement after 30 June each year, and
• Audited financial statements annually.
15.11 Other clients
of Kilter Rural
Kilter Rural and its principals currently advise other clients
with respect to a number of Australian land and Water
Entitlement portfolios and it may do so in the future.
15.12 Conflicts of interest
between different clients
Kilter Rural’s oversight of different client accounts may
subject it to various conflicts of interest. In addition, Kilter
Rural, its affiliates, and its principals may have investments
in other funds or interests in the performance of other client
accounts which pose conflicts of interest.
However, the portfolios of these client accounts may differ
as a result of applications and redemptions being made by
Investors at different times and in different amounts, as well
as due to different investment strategies and investment
profiles and/or different tax and regulatory considerations.
Kilter Rural will resolve conflicts with respect to investment
opportunities in accordance with its Conflicts of Interest
Policy, in a manner that it deems equitable to the extent
possible under the prevailing facts and circumstances and in
accordance with applicable law.
INFORMATION MEMORANDUM  -  AUSTRALIAN FARMLANDS FUNDS  -  JUNE 2020 63
16 Glossary
ABARES – Australian Bureau of Agricultural and Resource
Economics and Sciences
AFSL – Australian financial services licence
AML/CTF – Anti-Money Laundering and Counter-Terrorism
Financing Act
Application Form – The application form included in or
accompanied by this IM to be completed by a prospective
investor when applying for units.
Business Day(s) – A day on which banks are open
for business in Melbourne, except a Saturday, Sunday or
public holiday.
Constitutions – The constitutions dated 23 August
2018 establishing the Australian Farmlands Fund and the
Australian Farmlands Operating Fund and governing the
relationship between the Trustee and the Investors, as
amended from time to time.
Corporations Act – Corporations Act 2001 (Cth)
for the time being, in force together with the regulations
of the Corporations Act
CRS – Common Reporting Standard
FATCA – Foreign Account Tax Compliance Act
FDI – Foreign direct investment
FIRB – Foreign Investment Review Board
FUM – Funds under management
Funds (the Funds) – The investment vehicle comprising
the Australian Farmlands Fund (ABN 42 131 895 780) and
the Australian Farmlands Operating Fund (ABN 96 399
684 842), which operate together under a stapled unit
trust structure.
GFC – Global Financial Crisis 2008
High water mark – The highest peak in unit price that
a unit has achieved since the establishment of the Funds.
GST – Goods and Services Tax as defined in A New Tax
System (Goods and Services Tax) Act 1999, as amended
from time to time.
HRWE – High reliability Water Entitlements, Goulburn zone.
IM – This information memorandum and any replacement
or supplementary information memorandum.
Investor(s) – A person/persons who has acquired units
in the Funds.
64
IRR – internal rate of return
Kilter Investments/Trustee – Kilter Investments Pty Ltd
(ACN 152 558 113) (AFSL 414142)
Kilter Rural/manager – Kilter Pty Ltd (ACN 111 305 349).
Kilter Investments has appointed Kilter Rural as portfolio
manager of the Australian Farmlands Fund and Asset
Manager of the Australian Farmlands Operating Fund. Kilter
Rural discharges investment and asset management activities.
MDBA – Murray-Darling Basin Authority
ML – Megalitre or 1,000,000 litres
NAV – Net asset value
Offer – An invitation for Sophisticated Investors or
Wholesale Investors to apply to participate in the Funds
as set out in this IM.
sMDB – southern Murray-Darling Basin
Sophisticated Investor – A person who satisfies the
definition of ‘sophisticated investor’ in section 761GA
of the Corporations Act.
Unit – A unit in the Funds.
Water Allocation(s) – The annual volume of water
made available under a Water Entitlement and which are
prescribed by relevant government body depending on the
volume of water available within the relevant jurisdiction in
the Murray-Darling Basin river system.
Water Entitlement(s) – Personal or ongoing entitlement
to exclusive access to a share of water from a consumptive
pool or specified water resource, such as a river in the
Murray-Darling Basin.
Wholesale Investor – A person to whom a regulated
disclosure document is not required to be given under
the Corporations Act because the person satisfies at least
one of the following:
a. A professional investor (as that term is defined in the
Corporations Act)
b. Invests at least $500,000 into the Funds
c. Meets the minimum asset test ($2.5m of net assets)
or income test ($250,000 of gross income for the last
two financial years) set out in the Corporations Act, or
d. Otherwise satisfies the Trustee they are not a
‘retail client’ for the purposes of Chapter 7 of the
Corporations Act.
17 Instructions on how to invest

INFORMATION MEMORANDUM  -  AUSTRALIAN FARMLANDS FUNDS  -  JUNE 2020 65

17.1 Application Form
To apply for units, you will need to complete the Application Form attached to this IM. Please complete and lodge the Application
Form in accordance with this section.
The type of entity you are using to purchase units will determine how you complete the form. Please refer to the table below when
completing the name of the Investor.

TYPE OF INVESTOR CORRECT FORM

Individual • Peter Robert Smith

Use given names in full, not initials • P.R. Smith

Company • Smith Building Services Pty Ltd

Use full company name, not abbreviations • SBS P/L
• Smith Building Services

Minor (under 18 years of age) • Jane Elizabeth Smith <Jane Elizabeth Smith Jnr>
Use the name of the responsible adult with the • Jane Elizabeth Smith Jnr
minor in brackets, not just the name of the minor

Trusts • Peter Robert Smith <Smith Family Trust>

Use the name of the Trustee with the name of the • Smith Family Trust
trust in brackets, not just the name of the trust

Superannuation funds • Jane Elizabeth Smith <Smith Superannuation Fund>

Use the name of the Trustee with the name of the • Smith Superannuation Fund
fund in brackets, not just the superannuation fund

Partnerships • Peter Robert Smith and John Smith <Smith Brothers>

Use the name of the partners and not the name • Smith Brothers
of the firm or business

17.2 Eligibility 17.3 Minimum investment

The Offer under this IM can only be made to recipients who The minimum investment is $100,000 and thereafter in
qualify as Wholesale Investors or as Sophisticated Investors. multiples of $10,000 (although in either case the Trustee
For investors qualifying as wholesale investors under section may accept a lesser amount).
761G of the Corporations Act in reliance on an accountant’s
certificate. The certificate can be found on page 19 of the
Application Form.

66
17.4 Cheques
To apply for units, you must use the Application Form.
Please attach your cheque to the Application Form
and make it payable to ‘One Registry Services Pty Ltd
Applications Ac No. 5’. Your cheque must be drawn on an
Australian authorised deposit-taking institution and crossed
‘not negotiable’.
17.5 Direct deposits
You may also pay your application money by direct deposit
into the following account:
Account Name
One Registry Services Pty Ltd Applications Ac No. 5
Bank
St. George
BSB
332 027
Account Number
554897972
Reference
Investor surname/company or trust name (as applicable)
17.6 If you are applying
as an individual
The Application Form must be signed personally by you or
your attorney(s).
Joint applications must be signed by ALL applicants or their
authorised attorney(s). Please also note the full names of
the two joint applicants must appear with the second name
appearing as applicant #2 on the form.
Where there is only one applicant for this form, then just
complete the applicant #1 field on the Application Form.
Where the Application Form is signed by an attorney, the
Application Form must be accompanied by a copy of the
power of attorney and a declaration of non-revocation
of the power of attorney by the attorney.
INFORMATION MEMORANDUM  -  AUSTRALIAN FARMLANDS FUNDS  -  JUNE 2020
17.7 If you are applying
as a company
You need to sign the Application Form in the manner
required by the Act, which is for a director and secretary, two
directors or, if the company has only one director, then just
that director to sign the Application Form. There is no need
for you to apply a company seal.
17.8 If you are applying as a
trust (family or unit trust,
superannuation fund)
You need to apply in the name of the Trustee and also note
the full name of the trust on the Application Form.
If the Trustee is an individual, then the Application Form
must be signed personally by the Trustee or by its attorney.
If the Trustee is a company then you need to sign the
Application Form in the manner required by the Act,
which is for a director and secretary, two directors, or, if
the company has only one director, then just that director
to sign the Application Form. There is no need for you
to apply a company seal.
17.9 Tax File Number
You do not have to provide your Tax File Number (TFN).
However, if you do not provide your TFN, then Kilter Rural may
be required to deduct tax at the top marginal tax rate from
any income paid to you. You may be eligible for an exemption
to provide your TFN, in which case you will need to state the
reason in the Application Form in the space provided.
17.10 Acceptance of applications
Once you have signed and returned the Application Form,
you are bound to become an Investor if the Trustee accepts
your application. The Trustee may decide whether to accept
or reject, wholly or in part, your application in our absolute
discretion. The Trustee may decide whether to accept or
reject any Application Form. Your application may be rejected
if the offer is oversubscribed, or for any other reason.
If the Trustee rejects your application, then it will repay the
application money to you, less any taxes and bank fees in
connection with the application. You will not receive any
interest on your application money.
67
17.11 Lodging the Application Form
The Application Form and the cheque for the application money should be delivered or mailed to the following addresses:

Mail to One Registry Services

PO Box R1479
Royal Exchange
NSW 1225

Bank St George
Bank Address IBN 82, 1 King Street, Concord West, NSW 2138
Swift SGBLAU2S
BSB Number 332027
Account Number 554897972
Account Name One Registry Services Pty Ltd
Applications Account No 5
Reference ‘Investor surname/company or trust name’ (as applicable)

Alternatively, you may send your Application Form to your dealer or adviser who will forward the application to Kilter Rural.

68
 Kilter Rural assesses the inherent ability of a
farming landscape to deliver food and fibre
within a broader environmental envelope that
underpins long-term sustainable production.

For further information please contact:

Kilter Investments
Pty Ltd (AFSL 414142)
Phone: +61 3 5444 0112
Email: invest@kilterrural.com
 APPLICATION FORM
AUSTRALIAN FARMLANDS FUNDS
This Application Form accompanies the Information Memorandum dated 30 June 2020 (IM) issued by Kilter Investments
Pty Ltd ABN 31 152 558 113 AFSL 414142 (Issuer) in its capacity as Trustee of the Australian Farmlands Funds (AFF or
Fund) which is comprised of two open-ended Australian unregistered, unlisted unit trusts – the Australian Farmlands
Fund (ABN 42 131 895 780) and the Australian Farmlands Operating Fund (ABN 96 399 684 842) which operate
together under a stapled investment structure.

It is important that you read the IM in full and the acknowledgements contained in this Application Form before
applying for Units.

Unless otherwise defined, capitalised terms used in this Application Form have the same meaning given to them in
the IM.

Please tick one box below and complete the relevant Sections of the Application Form.

Investor Type Complete

 Individual/Joint Investors/Sole Traders Sections 1, 2, 5, 6, 7, 8, 9 and 10

 Company Sections 1, 3, 5, 6, 7, 8, 9 and 10

 Trust/Superannuation Fund with Individual Trustee Sections 1, 2, 4, 5, 6, 7, 8, 9 and 10

 Trust/Superannuation Fund with Corporate Trustee Sections 1, 3, 4, 5, 6, 7, 8, 9 and 10

If investing via a Financial Adviser

Please ensure both you and your financial adviser also complete ‘Section 11. Financial Adviser Details and Customer
Identification Declaration’. You do not need to provide copies of your certified identification documentation with your
Application Form if this information has been provided to your financial adviser, your financial adviser has elected to
retain this information, and agreed to make it available upon request, under Section 11 of this Application Form.

Application Process:
Step 1 – Complete Form (i.e. fill in all relevant sections of this form in blue or black pen)
Step 2 – Send your Application
Select your method of delivery below:
 Option 1 – Email – S
 can and email your application to info@oneregistryservices.com.au
(please include all supporting documents)
 Option 2 – Post/Delivery – Please post completed application form and all supporting documents to:
Australian Farmlands Funds Unit Registry
PO Box R1479
Royal Exchange NSW 1225
Questions
If none of the above categories are applicable to you, or you have other questions relating to this Application Form,
please contact the registrar on +61 2 8188 1510 or email info@oneregistryservices.com.au.

ISSUED BY
KILTER INVESTMENTS PTY LTD ABN 31 152 558 113
AFSL 414142
AUSTRALIAN FARMLANDS FUNDS
 1. INVESTMENT DETAILS

1.1 DETAILS

I/we apply to invest in the Australian Farmlands Funds.

Amount: AUD  .
(Minimum of $100,000)
Please tick the box beside your chosen payment method and complete the required details.
  Cheque
Made payable to: One Registry Services Pty Ltd – Applications Acc No. 5

  Electronic Funds Transfer or Direct Deposit

Bank: St George Bank
Reference: “Investor surname/company or trust name” (as applicable)
Account Name: One Registry Services Pty Ltd – Applications Acc No. 5
BSB: 332 027
Account number: 554897972
Date of Transfer

Reference Used

Source of Investment Funds

Please identify the source of your investable assets or wealth:
 Gainful employment  Inheritance/gift  Business activity

 Superannuation savings  Financial Investments

 Other – please specify

What is the purpose of this investment?

 Savings  Growth  Income

 Retirement  Business account

1.2 WHOLESALE CLIENT

I/We acknowledge that one of the following circumstances apply to me (please indicate):
(a) I am/we are applying for units at a price, or for the value of at least $500,000 under this Application Form

(b) I have/we have net assets of at least $2.5 million, and I am/we are applying for Units in the Fund for a purpose
other than for use in connection with a business
(c) I have/we have a gross income for each of the last two financial years of at least $250,000 per year, and I
am/we are applying for Units in the Fund for a purpose other than for use in connection with a business
(d) I am/we are a ‘professional investor’ as defined in the Corporations Act*

If (b) or (c) applies, please provide an Accountant’s Certificate with your Application Form (a template can be located at
the end of this form).
*If you consider yourself a ‘professional investor’ please contact the Registrar on the number provided in order to
complete the appropriate forms.

Australian Farmlands Funds | Application Form | June 2020 Page 2 of 19

 2. I NDIVIDUAL/JOINT INVESTORS/SOLE TRADERS/INDIVIDUAL TRUSTEES –
APPLICATION FORM
Complete this section if you are investing in your own name, including as a sole trader.

2.1 INVESTOR DETAILS

INVESTOR 1
Title Date of Birth

Given Names Surname

Place of Birth (City/Town) Country of Birth

Residential Address (not a PO Box)

Suburb State Postcode Country

Email

Mobile Number Telephone

Occupation

INVESTOR 2 (only applicable for joint investors)

Title Date of Birth

Given Names Surname

Place of Birth (City/Town) Country of Birth

Residential Address (not a PO Box)

Suburb State Postcode Country

Email

Mobile Number Telephone

Occupation

If there are more than two individuals please provide details and attach to this Application Form.

ADDITIONAL INFORMATION FOR SOLE TRADERS (only applicable if applying as a Sole Trader)
Full Business Name (if any)

Australian Business Number (if obtained)

Address of Principal Place of Business (not a PO Box). If same as residential address given above, mark ‘As Above’.

Suburb State Postcode Country

Australian Farmlands Funds | Application Form | June 2020 Page 3 of 19

 2.2 IDENTIFICATION DOCUMENTS

To comply with Australia’s Anti-Money Laundering and Counter-Terrorism Financing (AML/CTF) legislation, we must
collect certain information from prospective investors and their beneficial owners supported by CERTIFIED COPIES of
relevant identification documents for all investors and their beneficial owners.
Please refer to Section 12 for details of how to arrange certified copies. Please provide all documents in the proper
format otherwise we may not be able to process your application for investment.

Select one of the following options to verify each investor and Beneficial Owner.

 Provide a certified copy of a driver’s licence that contains a photograph of the licence/permit holder; or

 Provide a certified copy of a passport that contains a photograph and signature of the passport holder.

3. COMPANY/CORPORATE TRUSTEE – APPLICATION FORM

Complete this section if you are investing for, or on behalf of, a company.

3.1 COMPANY DETAILS

Full Company Name

Country of Formation, Incorporation or Registration

ARBN (if registered with ASIC) ACN/ABN (if registered in Australia)

Tax File Number or Exemption Code (Australian residents) AFS Licence Number (if applicable)

Name of Regulator (if licenced by an Australian Commonwealth, State or Territory statutory regulator)

Registered Business Address in Australia or in Country of Formation

Suburb State Postcode Country

Principal Place of Business (not a PO Box address)

Suburb State Postcode Country

If an Australian Company, registration status with ASIC.

 Proprietary Company  Public Company

If a Foreign Company, registration status with the relevant foreign registration body.
 Private/Proprietary Company  Public Company  Other – Please Specify 
Name of Relevant Foreign Registration Body Foreign Company Identification Number

Is the Company Listed?

 No  Yes – Name of Market/Stock Exchange

Is the Company a majority-owned subsidiary of an Australian listed company?

 No  Yes – Name of Australian Listed Company

– Name of Market/Stock Exchange

Australian Farmlands Funds | Application Form | June 2020 Page 4 of 19

3.1.2 DIRECTORS OF THE COMPANY/CORPORATE TRUSTEE
If the company is registered as a proprietary company by ASIC or a private company by a foreign registration body,
please list the name of each director of the company.
Director 1 – Full Name Director 4 – Full Name

Director 2 – Full Name Director 5 – Full Name

Director 3 – Full Name Director 6 – Full Name

If there are more than six directors please provide their full names on a separate page and attach to this
Application Form.

3.1.3 BENEFICIAL OWNERS OF THE COMPANY/CORPORATE TRUSTEE

Please provide details of the Beneficial Owner of the company who directly or indirectly control the company in Section
6.6. Please refer to Section 13 if you are unsure as to what Beneficial Owner means.

3.2 CONTACT PERSON DETAILS (Financial Adviser details not accepted)

Given Names Surname

Postal Address

Suburb State Postcode Country

Email

Mobile Number Telephone

3.3 IDENTIFICATION DOCUMENTS

To comply with AML/CTF legislation, we must collect certain identification documents from prospective investors and
their beneficial owners supported by CERTIFIED COPIES of relevant identification documents for all investors and their
beneficial owners.
Please refer to Section 12 for details of how to arrange certified copies. Please provide all documents in the proper
format otherwise we may not be able to process your application for investment.
Select one of the following options to verify the company.

 Perform a search of the ASIC database (unit registry to perform on behalf of the investor); or

 Provide a certified copy of the certification of registration issued by ASIC or the relevant foreign registration
body (must show full name of company, name of registration body, company identification number and type of
company – private or public).

Select one of the following options to verify the Officeholders who have signed the Application Form and
Beneficial Owners identified in Section 6.6.

 Provide a certified copy of a driver’s licence that contains a photograph of the licence/permit holder; or

 Provide a certified copy of a passport that contains a photograph and signature of the passport holder.

Australian Farmlands Funds | Application Form | June 2020 Page 5 of 19

 4. TRUST/SUPERANNUATION FUND
Complete this section if you are investing for, or on behalf of, a Trust/Superannuation Fund.

4.1 TRUST/FUND DETAILS

Full Name of Trust/Superannuation Fund

Country of Establishment

Tax File Number or Exemption Code Australian Business Number (if any)

4.1.1 TYPE OF TRUST
(Please tick ONE box from the list below to indicate the type of Trust and provide the required information)

Type A: Regulated Trust (e.g. self-managed superannuation fund)

Name of regulator (e.g. ASIC, APRA, ATO) Registration/Licensing details

Type B: Government Superannuation Fund

Name of the legislation establishing the fund

Type C: Foreign Superannuation Fund

Name of Regulator Registration/Licensing Details

Type D: Other Type of Trust/Unregulated Trust

Trust Description (e.g. family, unit, charitable)

4.2 ADDITIONAL INFORMATION FOR TYPE C AND TYPE D TRUSTS

4.2.1 SETTLOR OF THE TRUST

 The material asset contribution to the trust by the settlor at the time the trust was established was less than
$10,000.00.

 The settlor of the trust is deceased.

 Neither of the above is correct:

Provide the full name of the settlor of the trust.

4.2.2 BENEFICIARY DETAILS
Do the terms of the Trust identify the beneficiaries by reference to a membership of a class?
Yes – D
 escribe the class of beneficiaries below (e.g. unit holders, family members of named person,
charitable purposes)

No – P
 rovide the full names of each beneficiary in respect of the trust in Section 6.6 (includes beneficial owners
who ultimately own 25% or more of the trust). Refer to Section 13 if you are unsure as to what Beneficial
Owner means.

4.3 TRUSTEE DETAILS

If a trustee is an individual, please complete Section 2. If a trustee is a company, please complete Section 3.

Australian Farmlands Funds | Application Form | June 2020 Page 6 of 19

 4.4 IDENTIFICATION DOCUMENTS
To comply with AML/CTF legislation, we must collect certain information from prospective investors and their beneficial
owners supported by CERTIFIED COPIES of relevant identification documents for all investors and their beneficial
owners.
Please refer to Section 12 for details of how to arrange certified copies. Please provide all documents in the proper
format otherwise we may not be able to process your application for investment.

For Trusts identified under 4.1.1 as Type A & Type B – select one of the following options to verify the Trust.

 Perform a search of the relevant regulator’s website e.g. ‘Super Fund Lookup’ (unit registry to perform on behalf
of the investor);

 Provide a copy of an offer document of the managed investment scheme e.g. a copy of a Product Disclosure
Statement; or

 Provide a copy or relevant extract of the legislation establishing the government superannuation fund sourced
from a government website.

For Trusts identified under 4.1.1 as Type C & Type D – select one of the following options to verify the Trust.

 Provide a certified copy or a certified extract of the Trust Deed containing the cover page, recitals and
signature page;

 Provide an original letter from a solicitor or qualified accountant that confirms the name of the Trust and full name
of the settlor of the Trust; or

 Provide a notice issued by the Australian Taxation Office within the last 12 months (e.g. a Notice of Assessment).

For Trusts identified under 4.1.1 as Type C & Type D – select one of the following options to verify the Beneficiaries
and the Beneficial Owners identified in Section 6.6.

 Provide a certified copy of a driver’s licence that contains a photograph of the licence/permit holder; or

 Provide a certified copy of a passport that contains a photograph and signature of the passport holder.

AND relevant identification documents for the trustee as specified in Section 2 or 3 (as applicable).

5. PAYMENT INSTRUCTIONS DISTRIBUTIONS AND WITHDRAWALS

Please indicate how you would like your cash distributions to be paid by ticking one box only. If this is a new investment
and no nomination is made, cash distributions will be reinvested. A nomination in this section overrides any previous
nominations. There may be periods in which no cash distribution is payable, or we may make interim distributions. We
do not guarantee any particular level of distribution:
  Reinvest in the Fund; or

  Pay to my/our account (Please provide your financial institution account details as per below).

Financial Institution Account Details (must be an Australian financial institution)

Please provide account details for the credit of withdrawals and credit of distributions. Unless requested otherwise,
this will be the bank account we credit any withdrawal proceeds. By providing your nominated account details in this
section you authorise the Issuer to use these details for all future transaction requests that you make until written notice
is provided otherwise. For additional investments, a nomination in this section overrides any previous nominations.
Bank/Institution Branch

Account Name

BSB Account Number

The name of your nominated bank account must be the same as the Investor’s name.

Australian Farmlands Funds | Application Form | June 2020 Page 7 of 19

 6. ACCOUNT HOLDER’S TAX RESIDENCY AND CLASSIFICATION – FATCA & CRS
The account holder is the person listed or identified as applicant in Sections 2, 3 and 4 (Account Holder).

The Account Holder’s Country of Tax Residence, Tax payer Identification Number (TIN) or Tax File Number (TFN),
Global Intermediary Identification Number (GIIN), FATCA Status, CRS Status and Controlling Persons (includes
Beneficial Ownership details) should be provided in this section. If the person opening the account is not a Financial
Institution and is acting as an intermediary, agent, custodian, nominee, signatory, investment advisor or legal guardian
on behalf of one or more other account holders this form must be completed by or on behalf of that other person who
is referred to as the Account Holder.

If you are unable to complete this form please seek appropriate advice relating to the tax information required.
For further details relating to the implementation of FATCA and CRS, please refer to the Australian Taxation Office’s
guidance material link:
https://www.ato.gov.au/General/International-tax-agreements/In-detail/International-arrangements/Automatic-
exchange-of-information---CRS-and-FATCA/
If you are applying:
i. As an Individual/Joint Investors/Sole Trader please complete Section 6.1.
ii. All other types of entities please complete Sections 6.2, 6.3, 6.4, 6.5 and 6.6.

6.1 TAX RESIDENCE – INDIVIDUAL/SOLE TRADER

6.1.1 INVESTOR 1
Please provide details for all jurisdictions in which the Account Holder is resident for tax purposes (including Australia).
Country of Tax Residence 1  TIN 1/TFN
  TIN Unavailable:
 
Country of Tax Residence 2 (if applicable) TIN 2/TFN (if applicable)
  TIN Unavailable:
 
Country of Tax Residence 3 (if applicable) TIN 3/TFN (if applicable)
  TIN Unavailable:
 
TIN Unavailable Explanation(s) – If any ‘TIN Unavailable’ box is checked, please provide an explanation.

I certify the tax residence countries provided represent all countries in which I am considered a tax resident.
If Account Holder has additional countries of tax residence please attach a statement to this form containing the
Country and TIN for each such additional country.

6.1.2 IS THE ACCOUNT HOLDER A U.S. PERSON?

A U.S. person includes a U.S. citizen or resident alien of the U.S. even if residing outside the U.S.

 Yes 
If ‘Yes’, the Account Holder’s U.S. country of residence and U.S. Tax Identification Number must be
provided above.
 No

(If individual, proceed to Section 7. If Joint Investor, proceed to Section 6.1.3)

6.1.3 INVESTOR 2
Please provide details for all jurisdictions in which the Account Holder is resident for tax purposes (including Australia).
Country of Tax Residence 1  TIN 1/TFN
  TIN Unavailable:
 
Country of Tax Residence 2 (if applicable) TIN 2/TFN (if applicable)
  TIN Unavailable:
 
Country of Tax Residence 3 (if applicable) TIN 3/TFN (if applicable)
  TIN Unavailable:
 
TIN Unavailable Explanation(s) – If any ‘TIN Unavailable’ box is checked, please provide an explanation.

I certify the tax residence countries provided represent all countries in which I am considered a tax resident.
If Account Holder has additional countries of tax residence please attach a statement to this form containing the
Country and TIN for each such additional country.

Australian Farmlands Funds | Application Form | June 2020 Page 8 of 19

6.1.4 IS THE ACCOUNT HOLDER A U.S. PERSON?
A U.S. person includes a U.S. citizen or resident alien of the U.S. even if residing outside the U.S.

 Yes 
If ‘Yes’, the Account Holder’s U.S. country of residence and U.S. Tax Identification Number must be
provided above.
 No

(Proceed to Section 7)

6.2 ACCOUNT HOLDER’S GIIN (IF ANY) – COMPANIES, TRUSTS AND OTHER TYPES OF ENTITIES
Account Holder’s GIIN (if any)

Sponsoring Entity’s Name (if the Account Holder is a sponsored entity, please provide the sponsor’s GIIN)

6.3 TAX RESIDENCE OF THE ACCOUNT HOLDER – COMPANIES, TRUSTS AND

OTHER TYPES OF ENTITIES

Please provide details for all jurisdictions in which the Account Holder is resident for tax purposes (including Australia).
Country of Tax Residence 1  TIN 1/TFN
  TIN Unavailable:
 
Country of Tax Residence 2 (if applicable) TIN 2/TFN (if applicable)
  TIN Unavailable:
 
Country of Tax Residence 3 (if applicable) TIN 3/TFN (if applicable)
  TIN Unavailable:
 
TIN Unavailable Explanation(s) – If any ‘TIN Unavailable’ box is checked, please provide an explanation.

I /We certify the tax residence countries provided represent all countries in which the Account Holder is
considered a tax resident.
If Account Holder has additional countries of tax residence please attach a statement to this form containing the
Country and TIN for each such additional country.

6.4 FATCA STATUS – COMPANIES, TRUSTS AND OTHER TYPES OF ENTITIES

6.4.1 U.S. PERSON CERTIFICATION

Is the Account Holder a specified U.S. person?
 Yes Provide a U.S. Taxpayer Identification Number (TIN): 

 No (Proceed to Section 6.4.2)

6.4.2 NON U.S. PERSON CERTIFICATION

Select a classification that matches your FATCA status:
Select only a single category.

  Exempt Beneficial Owner (includes self-managed superannuation fund) (Proceed to Section 6.5)

  Active NFFE (Proceed to Section 6.5)

  Passive NFFE (Complete Section 6.5 and 6.6)

  Direct Reporting NFFE (Provide GIIN in Section 6.2 then proceed to Section 6.5)

  Participating FFI (Provide GIIN in Section 6.2 then proceed to Section 6.5)

  Local/Partner Jurisdiction FFI (Provide GIIN in Section 6.2 then proceed to Section 6.5)

  Deemed-Compliant FFI
Select deemed-compliant category:
 Trustee-Documented Trust (Provide GIIN and Trustee name in Section 6.2 then proceed to Section 6.5)

 Sponsored Investment Vehicle (Provide GIIN and Sponsor’s name in Section 6.2 then proceed to Section 6.5)

 Registered-Deemed Compliant FFI (Provide GIIN in Section 6.2 then proceed to Section 6.5)

 Other Deemed-Compliant Category (Proceed to Section 6.5)

Australian Farmlands Funds | Application Form | June 2020 Page 9 of 19

   Nonparticipating FFI (Proceed to Section 6.5)

  Sponsored Direct Reporting NFFE (Provide GIIN and Sponsor’s name in Section 6.2 then proceed to Section 6.5)

  Other – describe the FATCA status

(Proceed to Section 6.5)

6.5 CRS STATUS – COMPANIES, TRUSTS AND OTHER TYPES OF ENTITIES

6.5.1 FINANCIAL INSTITUTION
Is the entity an Investment Entity managed by another Financial Institution?
 Yes If any tax residence country provided is not a participating CRS jurisdiction, then complete Section 6.6.

 No (Proceed to Section 6.5.2)

6.5.2 NON-FINANCIAL ENTITY (NFE)

If the Account Holder is a Non-Financial Entity (NFE), select a classification that matches your CRS status:

  Non-Reporting Financial Institution (includes Broad Participation Retirement Fund, Narrow Participation
Retirement Fund, Exempt Collective Investment Vehicle, Trustee Documented Trust and Self-managed
Superannuation Fund)
(Proceed to Section 7)
  Other Active NFE (Proceed to Section 7)

  Passive NFE (Complete Section 6.6)

  Government Entity, International Organisation and Central Bank (Proceed to Section 7)

  A corporation, the stock of which is regularly traded on an established securities market

(or entity related to such a corporation):
Name of Securities Market:
OR
Name of Related Entity:
(Proceed to Section 7)

  Other – describe the CRS Status

(Proceed to Section 7)

6.6 CONTROLLING PERSONS (INCLUDES BENEFICIARY DETAILS UNDER SECTIONS 3.1.3 AND 4.2.2)

This section is considered an integral part of the self-certification to which it is associated. If there is a change in
Controlling Persons/Beneficial Ownership, please submit an updated form within 30 days.

6.6.1   CONTROLLING PERSON 1 AND/OR   BENEFICIAL OWNER 1

First Name Family Name/Surname

Current Residential Address

City/Town State/Province Postcode Country (do not abbreviate)

Date of Birth (DD/MM/YYYY) City/Town of Birth Country of Birth

Country of Tax Residence 1  TIN/TFN 1

  
Country of Tax Residence 2  TIN/TFN 2

  
Country of Tax Residence 3  TIN/TFN 3

  
TIN Unavailable Explanation(s) – If TIN is not provided above, please provide an explanation.

Australian Farmlands Funds | Application Form | June 2020 Page 10 of 19

6.6.2   CONTROLLING PERSON 2 AND/OR   BENEFICIAL OWNER 2
First Name Family Name/Surname

Current Residential Address

City/Town State/Province Postcode Country (do not abbreviate)

Date of Birth (DD/MM/YYYY) City/Town of Birth Country of Birth

Country of Tax Residence 1  TIN/TFN 1

  
Country of Tax Residence 2  TIN/TFN 2

  
Country of Tax Residence 3  TIN/TFN 3

  
TIN Unavailable Explanation(s) – If TIN is not provided above, please provide an explanation.

If there are more than 2 Controlling Persons or Beneficial Owners or Countries of Tax Residence, please provide the
details on a separate page and attach to this Application Form.

7. POLITICALLY EXPOSED PERSON (PEP) – Refer to Section 13 for details

Are there any PEPs under this Application Form?

 Yes

 No
If yes, please provide the name of anyone that is named in this Application Form as a PEP (includes investors, company
directors and beneficial owners) or is an immediate family member or close associate of a PEP.
Name of the PEP

Description of PEP’s position

Name of the PEP

Description of PEP’s position

If there more than 2 PEPs please provide the details on a separate page and attach to this Application Form

8. PRIVACY
Please tick the box if you consent to your personal information being used and disclosed for marketing purposes as
broadly described in the Privacy Statement in this IM.

 I/we wish to receive information regarding future investment opportunities.

You may change your election at any time by contacting the Issuer.

9. EMAIL COMMUNICATION CONSENT

Please tick the box below if you would like to receive all communications, including periodic statements, via email.

 I/we would like to receive all communications via email.

If the above box is not ticked all communications will be posted to you.

Australian Farmlands Funds | Application Form | June 2020 Page 11 of 19

 10. INVESTOR DECLARATION AND SIGNATURES
DECLARATION AND SIGNATURES
When you complete this Application Form you make the following declarations:
• I/we have read and understood the IM to which this Application Form applies, including any supplemental information;
• I/we have received and accepted the invitation to invest in Australia;
• I/we am/are a wholesale client as defined in Section 761G of the Corporations Act 2001 (Cth) and provide all supporting
documents required to evidence this. I/we am/are therefore eligible to invest in the Fund;
• The information provided in my/our Application Form is true, correct and complete in all respects;
• I/we agree to be bound by the provisions of the Constitutions governing the Fund and the terms and conditions of the
IM, each as amended from time to time;
• I/we acknowledge that none of the Issuer, their related entities, directors or officers have guaranteed or made any
representation as to the performance or success of the Fund, or the repayment of capital from the Fund. Investments in
the Fund are subject to various risks, including delays in repayment and loss of income or principal invested. Investments
in the Fund are not deposits with or other liabilities of the Issuer or any of its related bodies corporate or associates;
• I/we acknowledge the Issuer reserves the right to reject any application or scale back an application in its absolute
discretion;
• If applicable, after assessing my/our circumstances, I/we have obtained my/our own independent financial advice prior
to investing in the Fund;
• If this Application Form is signed under Power of Attorney, each Attorney declares he/she has not received notice of
revocation of that power (a certified copy of the Power of Attorney should be submitted with this Application Form);
• I am/we are over 18 years of age and I/we are eligible to hold units/investment in the Fund;
• I/we have all requisite power and authority to execute and perform the obligations under the IM and this
Application Form;
• I/we acknowledge that application monies will be held in a trust account until invested in the Fund or returned to
me/us. Interest will not be paid to applicants in respect of their application monies regardless of whether their monies
are returned;
• I/we have read the information on privacy and personal information contained in the IM and consent to my/our personal
information being used and disclosed as set out in the IM;
• I/we acknowledge that the Issuer may deliver and make reports, statements and other communications available in
electronic form, such as e-mail or by posting on a website;
• I/we indemnify the Issuer and each of its related bodies corporate, directors and other officers, shareholders, servants,
employees, agents and permitted delegates (together, the Indemnified Parties) and to hold each of them harmless
from and against any loss, damage, liability, cost or expense, including reasonable legal fees (collectively, a Loss)
due to or arising out of a breach of representation, warranty, covenant or agreement by me/us contained in any
document provided by me/us to the Issuer, its agents or other parties in connection with my/our investment in the
Fund. The indemnification obligations provided herein survive the execution and delivery of this Application Form, any
investigation at any time made by the Issuer and the issue and/or sale of the investment;
• To the extent permitted by law, I/we release each of the Indemnified Parties from all claims, actions, suits or demands
whatsoever and howsoever arising that I/we may have against any Indemnified Party in connection with the IM or
my/our investment;
• Other than as disclosed in this Application Form, no person or entity controlling, owning or otherwise holding an interest
in me/us is a United States citizen or resident of the United States or any other country for taxation purposes;
• I/we will promptly notify the Issuer of any change to the information I/we have previously provided to the Issuer,
including any changes which result in a person or entity controlling, owning or otherwise holding an interest in me/us;
• I/we consent to the Issuer disclosing any information it has in compliance with its obligations under the US Foreign
Account Tax Compliance Act (FATCA) and the OECD Common Reporting Standards for Automatic Exchange of
Financial Account Information (CRS) and any related Australian law and guidance implementing the same. This may
include disclosing information to the Australian Taxation Office, who may in turn report that information to the relevant
tax authorities as required;
• I/we acknowledge that the collection of my/our personal information may be required by the Financial Transaction
Reports Act 1988, the Corporations Act 2001, the Income Tax Assessment Act 1936, the Income Tax Assessment Act
1997, the Taxation Administration Act 1953, the FATCA and CRS (includes any related Australian law and guidance) and
the Anti-Money Laundering and Counter-Terrorism Financing Act 2006. Otherwise, the collection of information is not
required by law, but I/we acknowledge that if I/we do not provide personal information, the Issuer may not allow me/us
to invest in the Fund;
• I am/we are not aware and have no reason to suspect that the monies used to fund my/our investment in the Fund have
been or will be derived from or related to any money laundering, terrorism financing or similar or other activities illegal
under applicable laws or regulations or otherwise prohibited under any international convention or agreement
(AML/CTF Law);
• I/we will provide the Issuer with all additional information and assistance that the Issuer may request in order for the
Issuer to comply with the AML/CTF Law, FATCA and CRS;
• I/we acknowledge that the Issuer may decide to delay or refuse any request or transaction, including by suspending
the issue or redemption of investment in the Fund, if the Issuer is concerned that the request or transaction may breach
any obligation of, or cause the Issuer to commit or participate in an offence (including under the AML/CTF Law, FATCA
and CRS).

Australian Farmlands Funds | Application Form | June 2020 Page 12 of 19

Signature 1* Signature 2*

Full Name Full Name

Date Date

Tick capacity (mandatory for companies): Tick capacity (mandatory for companies):
 Sole Director and Company Secretary  Sole Director and Company Secretary

 Director
 Director

 Secretary
 Secretary
Company Seal (if applicable)

*Joint applicants must both sign;

*Company applications must be signed by two Directors, a Director and Secretary or the Sole Director and Secretary of
the company, details of which appear in Section 3.1; or
*For trust/superannuation fund applications each individual trustee must sign.

Application Process:
Step 1 – Complete Form (i.e. fill in all relevant sections of this form in blue or black pen)
Step 2 – Send your Application
Select your method of delivery below:
 Option 1 – Email – Scan and email your application to info@oneregistryservices.com.au
(please include all supporting documents)
 Option 2 – Post/Delivery – Please post completed application form and all supporting documents to:
Australian Farmlands Funds Unit Registry
PO Box R1479
Royal Exchange NSW 1225

Please ensure that you have transferred your application monies or enclose a cheque for payment.

Australian Farmlands Funds | Application Form | June 2020 Page 13 of 19

 11. FINANCIAL ADVISER DETAILS AND CUSTOMER IDENTIFICATION DECLARATION

Customer Identification Declaration (Financial Adviser to complete)

I confirm that I have completed an appropriate Customer Identification Declaration (CID) on this investor and/or the
beneficial owners which meets the requirements of the Anti-Money Laundering and Counter-Terrorism Financing Act
2006 (AML/CTF Act).
Please select the relevant option below:

 I have attached the verification documents that were used to perform the CID for this investor and/or the
beneficial owners; OR

 I have not attached the verification documents but will retain them in accordance with the AML/CTF Act and
agree to provide them to the Issuer or its agents with access to these documents upon request. I also agree
that if I become unable to retain the verification documents used for this application in accordance with the
requirements of the AML/CTF Act I will forward them to the Issuer.

I agree to provide the Issuer or its agents with any other information that they may require to support this Application.

Financial Adviser Name (if a new adviser, please attach a copy of your employee/representative authority)

Business Name

Adviser Number (if applicable)

Street Address

Suburb State Postcode Country

Postal Address

Suburb State Postcode Country

Office Telephone Mobile Number

Email

Australian Farmlands Funds | Application Form | June 2020 Page 14 of 19

DEALER DETAILS
Dealer Name

Dealer Number (if applicable)

Contact Person

AFSL Number ABN

Postal Address

Suburb State Postcode Country

Office Telephone

Email

Dealer Stamp

Signature of Financial Adviser

Date

Financial Adviser Access to Investor Information (Investor to complete)

Please tick the box below if you wish your financial adviser to have access to information and/or to receive copies of all
transaction confirmations. If no election is made, access to information and/or copies of transaction confirmations will
not be provided to your financial adviser.

 Please provide access to information and send copies of all transaction confirmations to my/our financial adviser.

You may change your election at any time by contacting the Issuer.

Australian Farmlands Funds | Application Form | June 2020 Page 15 of 19

 12. CERTIFYING A COPY OF AN ORIGINAL DOCUMENT
All documents must be provided in a certified copy format – in other words, a copy of the original document that has
been certified by an eligible certifier.
A ‘certified extract’ means an extract that has been certified as a true copy of some of the information contained in a
complete original document by one of the persons described below.
Please note that we require the copy which was actually signed by the certifier (i.e. the original penned signature of
the certifier).

People who can certify documents or extracts are:

1. A lawyer, being a person who is enrolled on the roll of the Supreme Court of a State or Territory, or the High Court
of Australia, as a legal practitioner (however described).
2. A judge of a court.
3. A magistrate.
4. A chief executive officer of a Commonwealth court.
5. A registrar or deputy registrar of a court.
6. A Justice of the Peace.
7. A notary public (for the purposes of the Statutory Declaration Regulations 1993).
8. A police officer.
9. An agent of the Australian Postal Corporation who is in charge of an office supplying postal services to the public.
10. A permanent employee of the Australian Postal Corporation with 2 or more years of continuous service who is
employed in an office supplying postal services to the public.
11. An Australian consular officer or an Australian diplomatic officer (within the meaning of the Consular Fees Act 1955).
12. An officer with 2 or more continuous years of service with one or more financial institutions (for the purposes of the
Statutory Declaration Regulations 1993).
13. A finance company officer with 2 or more continuous years of service with one or more financial companies (for the
purposes of the Statutory Declaration Regulations 1993).
14. An officer with, or authorised representative of, a holder of an Australian financial services licence, having 2 or more
continuous years of service with one or more licensees.
15. A member of the Institute of Chartered Accountants in Australia, CPA Australia or the National Institute of
Accountants with 2 or more years of continuous membership.

Australian Farmlands Funds | Application Form | June 2020 Page 16 of 19

 13. KEY DEFINITIONS
CONTROLLING PERSON(S)
‘Controlling Persons’ means with respect to an entity that is a legal person, natural person(s) who exercises control over
an entity.
This should be interpreted in a manner consistent with relevant Financial Action Task Force Recommendations on the
terms “beneficial owner”. Investors that are Passive NFFEs or NFEs under FATCA and CRS respectively should consult
their own advisors regarding any Control Person(s) they may have.

POLITICALLY EXPOSED PERSONS (PEP)

To comply with AML/CTF laws, we require you to disclose whether you are, or have an association with, a Politically
Exposed Person (‘PEP’). A PEP is an individual who holds a prominent public position or function in a government body
or an international organisation in Australia or overseas, such as a Head of State, or Head of a Country or Government,
or a Government Minister, or equivalent senior politician. A PEP can also be an immediate family member of a person
referred to above, including spouse, de facto partner, child, and a child’s spouse or a parent. A close associate of a PEP,
i.e. any individual who is known to have joint beneficial ownership of a legal arrangement or entity is also considered to
be a PEP. Where you identify as, or have an association with, a PEP, we may request additional information from you.

BENEFICIAL OWNER
To comply with AML/CTF laws, we require you to disclose the Beneficial Owners. Beneficial Owner means an individual
who ultimately owns or controls (directly or indirectly) the investor.
‘Owns’ means ownership (either directly or indirectly) of 25% or more of the investor.
‘Controls’ includes control as a result of, or by means of, trusts, agreements, arrangements, understandings and
practices, whether or not having legal or equitable force and whether or not based on legal or equitable rights, and
includes exercising and control through the capacity to determine decisions about financial and operating policies.

TAXPAYER IDENTIFICATION NUMBER (TIN)

Taxpayer Identification Number (TIN) means the number assigned by each country for the purpose of administering tax
laws. This is the equivalent of a Tax File Number (TFN) in Australia or an Employer Identification Number (EIN) in the U.S.

GLOBAL INTERMEDIARY IDENTIFICATION NUMBER (GIIN)

Global Intermediary Identification Number (GIIN) means the Global Intermediary Identification Number (GIIN) and it
is a unique identification number that non-US financial institutions receive from the IRS (i.e. IRS of the U.S.) when they
register as a financial institution for FATCA.

FOREIGN ACCOUNT TAX COMPLIANCE ACT (FATCA)

FATCA means the U.S. Foreign Account Tax Compliance Act.

COMMON REPORTING STANDARDS (CRS)

CRS means OECD Common Reporting Standards for Automatic Exchange of Financial Account Information.

Australian Farmlands Funds | Application Form | June 2020 Page 17 of 19

The following form is for the use of Australian Applicants only who are investing less than AUD $500,000

ACCOUNTANT’S CERTIFICATE THAT CLIENT IS WHOLESALE UNDER SECTION 761G(7)

OF THE CORPORATIONS ACT
To: Kilter Investments Pty Ltd
28 Bridge Street
BENDIGO VIC 3552

I,

Of

Certify as follows:
1. I am a qualified accountant for the purposes of the Corporations Act, being a member of the Institute of Chartered
Accountants in Australia/CPA Australia/National Institute of Accountants and am subject to, and comply with, that
body’s continuing education requirements.

2. I am giving this certificate in accordance with Section 761G(7)(c) of the Corporations Act at the request of,
and with reference to,

(Investor) and acknowledge that this certificate will be relied upon to make offers of financial products to the
Investor without disclosure under Part 7.9 of the Corporations Act.

3. I certify that, having reviewed the financial position of the Investor:

(a) the Investor has net assets of at least A$2.5 million; or
(b) the Investor had a gross income for each of the last two financial years of at least A$250,000 a year.

Signature

Print name

Dated

Notes
The certificate should be:
1. Provided before any offer is made; and
2. Given no earlier than two years before the offer is made.

Australian Farmlands Funds | Application Form | June 2020 Page 18 of 19

 ADDITIONAL INVESTMENT FORM – AUSTRALIAN FARMLANDS FUNDS

Additional Investment Form For Existing Investors

Please use this form if you are already an investor in the Australian Farmlands Funds and wish to make an
additional investment. New investors should complete a new Application Form.

INVESTOR DETAILS
Number Name

Company/Fund/Super Fund Name

ADDITIONAL INVESTMENT DETAILS

Please tick the box beside your chosen payment method and complete the required details.
  Cheque
Made payable to: One Registry Services Pty Ltd – Applications Acc No. 5
Amount: AUD  .

  Electronic Funds Transfer or Direct Deposit

Bank: St George Bank
Reference: ‘Investor surname/company or trust name’ (as applicable)
Account Name: One Registry Services Pty Ltd – Applications Acc No. 5
BSB: 332 027
Account number: 554897972
Amount: AUD  .
Date of Transfer

Reference Used

INVESTOR CONFIRMATION
Signature 1* Signature 2*

Full Name Full Name

Date Date

Tick capacity (mandatory for companies): Tick capacity (mandatory for companies):
 Sole Director and Company Secretary  Sole Director and Company Secretary

 Director  Director

 Secretary
 Secretary
Company Seal (if applicable)

*Joint applicants must both sign;

*Company applications must be signed by two Directors, a Director and Secretary or the Sole Director and Secretary of
the company; or
*For trust/superannuation fund applications each individual trustee must sign.

Australian Farmlands Funds | Application Form | June 2020 Page 19 of 19