balmain 4463 june 2010...aqua high income trust were offered a voluntary redemption offer of 10% of...

Balmain AQUA Income TrustsPerformance Update - June 2010

A quarterly bulletin designed to give you an update and news surrounding the Balmain AQUA Income Trusts.

Balmain AQUA Income TrustsPerformance Update - June 2010 3

Balmain AQUA Income Trust ARSN 110 222 850Balmain AQUA High Income Trust ARSN 110 223 348Responsible Entity: The Trust Company (RE Services) LimitedABN 45 003 278 831, AFSL 235150

Balmain AQUAPostal AddressLevel 14, 60 Castlereagh Street, Sydney NSW 2000tel 1800 238 637fax 02 9232 8588web www.balmainaqua.com.au

Contents

Commentary 4

Balmain AQUA Income Trust 6

Balmain AQUA High Income Trust 12

Disclaimer 18

Balmain AQUA Income Trusts4 Performance Update - June 2010

PERFORMANCEOfficial interest rates stayed on hold in the 2nd quarter of 2010, so there were no substantive changes to the returns from the Trusts.

UNITHOLDER MEETING OUTCOMESThe unitholder meetings held on April 20th in Sydney resulted in support of the Manager’s proposals as outlined in the Notice of Meeting. As a consequence there are a number of changes to the Funds and the Manager.

Following the meeting, Mirvac Funds Management Limited retired as the Responsible Entity and was replaced by The Trust Company (RE Services) Limited.

Mirvac exited as a 50% shareholder in the Manager Mirvac AQUA Pty Ltd and their shares were acquired by the remaining 50% shareholder Balmain Corporation. The Manager was renamed as Balmain AQUA Pty Ltd.

The Mirvac AQUA Enhanced Income Fund was wound up following the meeting and funds returned to investors.

The Mirvac AQUA Income Fund was renamed the Balmain AQUA Income Trust and the Mirvac AQUA High Income Fund was renamed the Balmain AQUA High Income Trust.

In May, unitholders in the Balmain AQUA Income Trust and the Balmain AQUA High Income Trust were offered a voluntary redemption offer of 10% of the units in each Trust and this was paid on 28 June 2010. The next voluntary offer will be made to investors in May 2011. Investors in the Balmain AQUA High Income Trust were provided a mandatory redemption and payment was made direct to investors registered bank accounts on 16 July 2010. The redemption was paid to all investors on a pro-rata basis and was paid out of the net proceeds from the realisation of the trusts existing mortgage assets from 1 December 2009 to 31 May 2010. The payment has resulted in a commensurate reduction in a unitholders unit holding. The next mandatory redemption will occur in December 2010.

Finally, the revised investment strategies for both funds will commence shortly and we will provide an update in the next quarterly report.

Commentary


ABOUT BALMAIN CORPORATIONBalmain AQUA Pty Limited is now the Manager of the Trusts. By way of background, Balmain has been involved in the management of the Trusts (in partnership with Mirvac) since their launch in 2004. It is Australia’s longest established non-bank provider/arranger of commercial mortgage finance (over 30 years in the business) and over the last 10 years has originated $21b in commercial mortgage loans. With over 130 staff many of whom are highly experienced credit professionals, commercial mortgage lenders, property specialists and fund managers it is particularly well suited to manage the trusts. In 2009 Balmain acquired the management rights to the Mariner Mortgage Trust (now the Balmain (MMT) Mortgage Trust. Later in the same year at the request of unitholders and in partnership with Trilogy Funds Management it took over the management of the City Pacific First Mortgage Fund (now renamed Pacific First Mortgage Fund). As well as its fund management activities, Balmain is also an RE in its own right, undertakes asset management of commercial loan portfolios on behalf of several banks and a major Australian life company.

In coming months we will introduce Balmain Corporation and its activities in greater detail.

Yours sincerely

Stephen Tunley

CEO Balmain Funds


PORTFOLIO INFORMATION AS AT 30 JUNE 2010Note the portfolio information provided is the percentage of the dollar value of underlying loan portfolios of the Senior Debt Pool that the Balmain AQUA Income Trust invests in. When a number of loans are disclosed, these may not be complete loans, but rather the number of loans the Fund has exposure to in that category.

INVESTMENT OBJECTIVE AND STRATEGY The Balmain AQUA Income Trust aims to provide investors with regular monthly income as well as stability of capital. The Balmain AQUA Income Trust invests primarily in loans secured by registered first mortgage investments via the Balmain AQUA Senior Debt Pool.

Funds Under Management (FUM) $33,806,454

Mortgages Under Management (MUM) $19,031,890

Provision for loss -$3,300,000

Mortgages Under Management, net of provision $15,731,890

Average Loan to Value Ratio, net of provision* 59.95%

Average Loan to Value Ratio** 58.86%

Approved undrawn loan commitments^

Value $574,741

No. of loans 3

Largest Individual loan^^ Value $3,587,948

as a % of loans 18.85%

10 largest loans (aggregate)^^ Value $18,296,890


Loans with capitalising interest^^ Value $0


No. of loans -

Date Trust was first available for investment 7/10/04

* Calculated on the currently drawn balance and excludes loans for which a loss provision has been made.

** Calculated on a currently drawn balance and includes all loans in the portfolio, including those loans that are impaired and/or have provisions for loss. For some of the impaired loans, the security may have been revalued downwards which could result in individual Loan to Value Ratios equal to or greater than 100%. In this case, it could inflate the total average Loan to Value Ratio of the portfolio.

^ It is the practice of Balmain AQUA that at the time of approval of a loan, sufficient funds to cover the entire loan approval balance are kept in the cash proportion of the Trust, allowing for undrawn loan commitments to be met as and when needed.

^^ Calculated on a look through basis to the underlying investment pool and the percentage exposure has not taken into account any loss provisions made.

Balmain AQUA Income Trust


LOANS IN ARREARS (INTEREST OUTSTANDING 7-28 DAYS)

0% 100%

NO. OF LOANS % OF MUM VALUE ($)

0 0.00% $0

LOANS IN MONETARY DEFAULT (INTEREST OUTSTANDING >28 DAYS)

0% 100%

NO. OF DAYSNO. OF LOANS % OF MUM VALUE ($)

29-60 days 0 0.00% $0

61-90 days 0 0.00% $0

90+ days 2 23.17% $4,410,035

TOTAL 2 23.17% $4,410,035

LOANS IN TECHNICAL DEFAULT (CONDITION OF LOAN TERM BREACHED BUT NOT CURRENTLY CONSIDERED TO BE POTENTIAL LOSS)

0% 100%

NO. OF DAYSNO. OF LOANS % OF MUM EXPOSURE ($)

1-28 days 0 0.00% $0

29-60 days 0 0.00% $0

61-90 days 0 0.00% $0

90+ days 3 16.71% $3,179,757

TOTAL 3 16.71% $3,179,757

TRUST ASSET ALLOCATION

0% 100%

ASSET TYPENO. OF LOANS % OF FUM EXPOSURE ($)

Cash & Liquid Assets 0 53.46% $18,074,564

Provision for loss 0 -9.76% -$3,300,000

Balmain AQUA Senior Debt Pool

11 56.30% $19,031,890

Balmain AQUA Construction Debt Pool

0 0.00% $0

Balmain AQUA Mezzanine Debt Pool

0 0.00% $0

TOTAL 11 100.00% $33,806,454


Balmain AQUA Income Trust (continued)

CLASS OF ACTIVITY

0% 100%

ACTIVITY CLASSNO. OF LOANS % OF MUM EXPOSURE ($)

Residential 1 18.85% $3,587,511

Commercial 3 22.74% $4,327,852

Industrial 0 0.00% $0

Retail 1 7.88% $1,499,713

Specialised property 2 29.50% $5,614,408

Land / DA 4 21.03% $4,002,407

Mixed use 0 0.00% $0

TOTAL 11 100.00% $19,031,890

GEOGRAPHICAL DIVERSIFICATION

0% 100%

REGIONNO. OF LOANS % OF MUM EXPOSURE ($)

NSW 4 50.94% $9,694,845

VIC 2 12.20% $2,321,891

QLD 5 36.86% $7,015,155

WA 0 0.00% $0

SA 0 0.00% $0

Other State & Territory 0 0.00% $0

TOTAL 11 100.00% $19,031,890

LVR PROFILE

0% 100%

RATE RANGENO. OF LOANS % OF MUM EXPOSURE ($)

90.00% 3 16.59% $3,157,391

TOTAL 11 100.00% $19,031,890


NATURE OF SECURITY

0% 100%

CATEGORYNO. OF LOANS % OF MUM EXPOSURE ($)

1st mortgage investment 11 100.00% $19,031,890

1st mortgage construction 0 0.00% $0

2nd mortgage investment 0 0.00% $0

2nd mortgage construction 0 0.00% $0

TOTAL 11 100.00% $19,031,890

MATURITY PROFILE

0% 100%

TIME RANGENO. OF LOANS % OF MUM EXPOSURE ($)

< 0.5 year 6 52.81% $10,050,741

0.5 - 1 year 0 0.00% $0

1 - 2 years 2 23.18% $4,411,592

2 - 3 years 3 24.01% $4,569,557

>3 years 0 0.00% $0

TOTAL 11 100.00% $19,031,890


INTEREST RATE PROFILE

0.00%-5.99%

6.00%-6.49%

6.50%-6.99%

7.00%-7.49%

7.50%-7.99%

8.00%-8.49%

8.50%-8.99%

9.00%-9.49%

9.50%-9.99%

10.00%-10.49%

10.50%-10.99%

11.00%-11.49%

11.50%-11.99%

12.00%-12.49%

12.50%-12.99%

13.00%-13.49%

13.50%-13.99%

14.00%-14.49%

14.50%-14.99%

15.00%-15.49%

15.50%-15.99%

16.00%-16.49%

16.50%-16.99%

17.00%-17.49%

17.50%-17.99%

18.00%-18.49%

18.50%-18.99%

19.00%-19.49%

19.50%-20.00%

>20.00%

0% 10% 20% 30% 40% 50% 60%

Balmain AQUA Income Trust (continued)




0.00%-5.99% 2 23.17% $4,409,689

6.00%-6.49% 4 32.98% $6,276,717

6.50%-6.99% 0 0.00% $0

7.00%-7.49% 2 18.65% $3,549,448

7.50%-7.99% 2 12.27% $2,335,213

8.00%-8.49% 1 12.93% $2,460,823

8.50%-8.99% 0 0.00% $0

9.00%-9.49% 0 0.00% $0

9.50%-9.99% 0 0.00% $0

10.00%-10.49% 0 0.00% $0

10.50%-10.99% 0 0.00% $0

11.00%-11.49% 0 0.00% $0

11.50%-11.99% 0 0.00% $0

12.00%-12.49% 0 0.00% $0

12.50%-12.99% 0 0.00% $0

13.00%-13.49% 0 0.00% $0

13.50%-13.99% 0 0.00% $0

14.00%-14.49% 0 0.00% $0

14.50%-14.99% 0 0.00% $0

15.00%-15.49% 0 0.00% $0

15.50%-15.99% 0 0.00% $0

16.00%-16.49% 0 0.00% $0

17.00%-17.49% 0 0.00% $0

17.50%-17.99% 0 0.00% $0

18.00%-18.49% 0 0.00% $0

18.50%-18.99% 0 0.00% $0

19.00%-19.49% 0 0.00% $0

19.50%-20.00% 0 0.00% $0

>20.00% 0 0.00% $0

TOTAL 11 100.00% $19,031,890


PORTFOLIO INFORMATION AS AT 30 JUNE 2010Note the portfolio information provided is the percentage of the dollar value of underlying loan portfolios of the Debt Pools that the Balmain AQUA High Income Trust invests in. When a number of loans are disclosed, these may not be complete loans, but rather the number of loans the Trust has exposure to in that category.

INVESTMENT OBJECTIVE AND STRATEGY The Balmain AQUA High Income Trust aims to provide investors with regular monthly income as well as stability of capital. It aims to achieve higher returns than the Balmain AQUA Income Trust which is consistent with its underlying investments which are of a higher risk in nature.

The Balmain AQUA High Income Trust invests primarily in loans secured by a mix of registered first, second and subordinated mortgage investments via the Balmain AQUA Construction Debt Pool and the Balmain AQUA Mezzanine Debt Pool. It may also invest in the Balmain AQUA Senior Debt Pool.

Funds Under Management (FUM) $117,924,391

Mortgages Under Management (MUM) $56,144,996

Provision for loss -$23,915,351

Mortgages Under Management, net of provision $32,229,644

Average Loan to Value Ratio, net of provision* 55.64%

Average Loan to Value Ratio** 61.11%

Approved undrawn loan commitments^

Value $3,897,066

No. of loans 7

Largest Individual loan^^ Value $12,882,645


10 largest loans (aggregate)^^ Value $46,771,157


Loans with capitalising interest^^ Value $13,811,948


No. of loans 5

Date Fund was first available for investment 7/10/04

* Calculated on the currently drawn balance and excludes loans for which a loss provision has been made.

** Calculated on a currently drawn balance and includes all loans in the portfolio, including those loans that are impaired and/or have provisions for loss. For some of the impaired loans, the security may have been revalued downwards which could result in individual Loan to Value Ratios equal to or greater than 100%. In this case, it could inflate the total average Loan to Value Ratio of the portfolio.

^ It is the practice of Balmain AQUA that at the time of approval of a loan, sufficient Funds to cover the entire loan approval balance are kept in the cash proportion of the Trust, allowing for undrawn loan commitments to be met as and when needed.

^^ Calculated on a look through basis to the underlying investment pools and the percentage exposure has not taken into account any loss provisions made.

Balmain AQUA High Income Trust


LOANS IN ARREARS (INTEREST OUTSTANDING 7-28 DAYS)

0% 100%

NO. OF LOANS % OF MUM VALUE ($)

0 0.00% $0

LOANS IN MONETARY DEFAULT (INTEREST OUTSTANDING >28 DAYS)

0% 100%

NO. OF DAYSNO. OF LOANS % OF MUM VALUE ($)

29-60 days - 0.00% $0

61-90 days - 0.00% $0

90+ days 12 58.38% $32,779,128

TOTAL 12 58.38% $32,779,128

LOANS IN TECHNICAL DEFAULT (CONDITION OF LOAN TERM BREACHED BUT NOT CURRENTLY CONSIDERED TO INCUR A LOSS)

0% 100%

NO. OF DAYSNO. OF LOANS % OF MUM EXPOSURE ($)

1-28 days - 0.00% $0

29-60 days - 0.00% $0

61-90 days - 0.00% $0

90+ days 10 11.61% $6,517,661

TOTAL 10 11.61% $6,517,661

TRUST ASSET ALLOCATION

0% 100%

ASSET TYPENO. OF LOANS % OF FUM EXPOSURE ($)

Cash & Liquid Assets 0 72.67% $85,694,747

Provision for loss 0 -20.28% -$23,915,351

Balmain AQUA Senior Debt Pool

0 0.00% $0

Balmain AQUA Construction Debt Pool

2 2.99% $3,522,665

Balmain AQUA Mezzanine Debt Pool

28 44.62% $52,622,331

TOTAL 30 100.00% $117,924,391


Balmain AQUA High Income Trust (continued)

CLASS OF ACTIVITY

0% 100%

ACTIVITY CLASSNO. OF LOANS % OF MUM EXPOSURE ($)

Residential 9 17.85% $10,021,746

Commercial 4 1.32% $739,625

Industrial 1 1.33% $745,064

Retail 2 16.28% $9,141,986

Specialised property 0 0.00% $0

Land / DA 4 15.33% $8,609,021

Mixed use 10 47.89% $26,887,554

TOTAL 30 100.00% $56,144,996

GEOGRAPHICAL DIVERSIFICATION

0% 100%

REGIONNO. OF LOANS % OF MUM EXPOSURE ($)

NSW 5 3.64% $2,044,846

VIC 6 47.09% $26,436,165

QLD 15 42.97% $24,123,572

WA 1 0.72% $402,443

SA 0 0.00% $0

Other State & Territory 3 5.59% $3,137,969

TOTAL 30 100.00% $56,144,996

LVR PROFILE

0% 100%


90.00% 2 31.40% $17,631,361

TOTAL 30 100.00% $56,144,996


NATURE OF SECURITY

0% 100%

CATEGORYNO. OF LOANS % OF MUM EXPOSURE ($)

1st mortgage investment 0 0.00% $0

1st mortgage construction 2 3.14% $1,760,784

2nd mortgage investment 19 77.81% $43,686,837

2nd mortgage construction 9 19.05% $10,697,374

TOTAL 30 100.00% $56,144,996

MATURITY PROFILE

0% 100%

TIME RANGENO. OF LOANS % OF MUM EXPOSURE ($)

< 0.5 year 28 99.53% $55,878,513

0.5 - 1 year 1 0.19% $108,768

1 - 2 years 0 0.00% $0

2 - 3 years 1 0.28% $157,714

>3 years 0 0.00% $0

TOTAL 30 100.00% $56,144,996



0.00%-5.99%

6.00%-6.49%

6.50%-6.99%

7.00%-7.49%

7.50%-7.99%

8.00%-8.49%

8.50%-8.99%

9.00%-9.49%

9.50%-9.99%

10.00%-10.49%

10.50%-10.99%

11.00%-11.49%

11.50%-11.99%

12.00%-12.49%

12.50%-12.99%

13.00%-13.49%

13.50%-13.99%

14.00%-14.49%

14.50%-14.99%

15.00%-15.49%

15.50%-15.99%

16.00%-16.49%

16.50%-16.99%

17.00%-17.49%

17.50%-17.99%

18.00%-18.49%

18.50%-18.99%

19.00%-19.49%

19.50%-20.00%

>20.00%

0% 10% 20% 30% 40% 50% 60%

Balmain AQUA High Income Trust (continued)




0.00%-5.99% 12 58.38% $32,777,364

6.00%-6.49% 0 0.00% $0

6.50%-6.99% 0 0.00% $0

7.00%-7.49% 3 24.09% $13,524,089

7.50%-7.99% 2 0.81% $456,827

8.00%-8.49% 0 0.00% $0

8.50%-8.99% 0 0.00% $0

9.00%-9.49% 0 0.00% $0

9.50%-9.99% 2 3.96% $2,224,314

10.00%-10.49% 0 0.00% $0

10.50%-10.99% 0 0.00% $0

11.00%-11.49% 0 0.00% $0

11.50%-11.99% 3 1.54% $864,709

12.00%-12.49% 1 1.39% $777,694

12.50%-12.99% 0 0.00% $0

13.00%-13.49% 1 1.33% $745,064

13.50%-13.99% 2 1.32% $739,625

14.00%-14.49% 1 0.19% $108,768

14.50%-14.99% 0 0.00% $0

15.00%-15.49% 1 4.55% $2,556,058

15.50%-15.99% 0 0.00% $0

16.00%-16.49% 0 0.00% $0

16.50%-16.99% 1 0.24% $135,961

17.00%-17.49% 1 2.20% $1,234,522

17.50%-17.99% 0 0.00% $0

18.00%-18.49% 0 0.00% $0

18.50%-18.99% 0 0.00% $0

19.00%-19.49% 0 0.00% $0

19.50%-20.00% 0 0.00% $0

>20.00% 0 0.00% $0

TOTAL 30 100.00% $56,144,996


DISCLAIMERThe information provided in this report is provided by The Trust Company (RE Services) Limited ABN 45 003 278 831, AFS License 235150 (The Trust Company) in its capacity as responsible entity of the Balmain AQUA Income Trust, ARSN 110 222 850, and the Balmain AQUA High Income Trust ARSN 110 223 348 (collectively the Balmain AQUA Income Trusts).

The information contained in this report is of a general nature and does not constitute financial product advice. This report has been prepared without taking account of any person’s objectives, financial situation or needs. Because of that, each person should, before acting on this report, consider its appropriateness, having regard to their own objectives, financial situation and needs.

The information contained in this report has been prepared by Balmain AQUA Pty Limited. The information is current as at the date of this report and is subject to change without notice.

Past performance is not an indicator of future performance. This update contains certain forward looking statements. The words ‘likely’, ‘anticipated’, ‘expected’, ‘projections’, ‘forecast’, ‘estimates’, ‘could’, ‘may’, ‘target’, ‘consider’ and ‘will’ and other similar expressions are intended to identify forward looking statements. Forward looking statements, opinions and estimates provided in this update are based on assumptions and contingencies which are subject to change without notice, as are statements about market and industry trends, which are based on interpretations of current market conditions. Forward looking statements including projections, indications or guidance on future earnings or financial position and estimates are provided as a general guide only and should not be relied upon as an indication or guarantee of future performance. There can be no assurance that actual outcomes will not differ materially from these statements. To the full extent permitted by law, The Trust Company and Balmain AQUA Pty Limited and their directors, officers, employees, advisers, agents and intermediaries disclaim any obligation or undertaking to release any updates or revisions to the information to reflect any change in expectations or assumptions.

Investment in the Balmain AQUA Income Trusts is subject to investment risk, including possible delays in payment and loss of income and principal invested. Neither Balmain AQUA Pty Limited nor The Trust Company nor their respective associates, related entities directors or officers guarantee the performance of the Balmain AQUA Income Trusts or the repayment of monies invested.

FIND OUT MORE Balmain AQUA 1800 238 637 visit our website at www.balmainaqua.com.au

BAQ 4322

balmain 4463 june 2010...aqua high income trust were offered a voluntary redemption offer of 10% of...

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