"Another announcement of significance for the portfolio was the...

"Another announcement of significance for the portfolio was the sale by Site Group Holdings (SIT) of 62.5% of the
subsidiary that holds the Clark landholding that has been the central plank in our investment thesis for SIT. To the
casual observer, the sale would look like selling off the family farm to stay viable, which to some extent it is, but there
is good reason to think the latest development represents a turning point. Covid has had a devastating impact on SIT.
We have always been comforted that there is a land asset hidden in the business, but as the difficult period for the
education business extended, finding a way to realise value for shareholders in anything other than a firesale looked
difficult. Owning 37.5% of something valuable is better than 100% of nothing.

The current transaction looks to have solved this matter. Included in the consortium acquiring the 62.5% stake are
Nicasio Alcantara, who is a native of the Philippines with decades of experience navigating the Filipino commercial
framework. Nicasio was always likely to be part of the deal, and while his skillset is valuable, to Australian domiciled
investors, the participation of Paul Weightman’s Stara Investments is likely to carry more weight. Paul was founder
and CEO for more than 20 years of property behemoth Cromwell Property Group. Interacting with Paul through the
sale of the 62.5% interest in Site Group Holdings (which owns the Clark lease) has been very good for my confidence
in how the property development will unfold.

There is a clear path to value creation now. The increase to the Floor Area Ratio (FAR) and extension of the lease will
be completed as a matter of priority. Once received, the value of the property is materially improved, to ensure the
property subsidiary is fully funded to maximise the value created from the rest of the landholding, a small land sale is
likely to be targeted as soon as practicable thereafter. The progress at Clark despite Covid has been enormous
(outlined in a recent market announcement), with SIT and their A-grade partners holding the last large parcel inside
the special economic zone, and the business now being sustainably funded, extracting as much of the enormous value
as possible now looks a very realistic prospect. If management can successfully execute a turnaround in the education
business at the same time, the outcome would be truly excellent."