31 October 2019
Cromwell Direct Property Fund (Fund) has secured its seventh direct commercial property asset, located in the city of Queanbeyan, approximately 15 kilometres south-east of the Canberra CBD for an acquisition price of $35 million, reflecting a passing yield of 6.0%.
The acquisition comprises a 4,052 square metre (sqm) site with 6,300 sqm of net lettable area over a four-level commercial office building, together with basement parking for 101 vehicles, plus limited at-grade on-site spaces; all constructed in approximately 2008. The property has a 4.5-Star NABERS Energy Rating.
The Property is fully let to the NSW State Government until June 2028. The lease is a net lease, with the rent subject to biennial market reviews protected by a ‘ratchet’, with increases over the previous rent capped at 8%.
The Fund acquired the asset from a related party, a wholly owned subsidiary of the Cromwell Diversified Property Trust. All negotiations were carried out on arm’s length terms but the Directors of Cromwell Funds Management Limited have elected to reduce the acquisition fee by 50% to reflect the detailed knowledge the group already holds on the asset.
The Property has a Weighted Average Lease Expiry (WALE) of 8.5 years, and after acquisition the Fund’s overall WALE will be 8.0 years.
Fully leased to the NSW State Government, 11 Farrer Place brings greater stability to the Fund’s income and tenancy profile. The acquisition is accretive to Fund earnings and takes the Fund’s direct property portfolio to $334.7 million and the look-through property exposure to 11 assets, with a total investment value of $436.7 million.
The acquisition settled on 31 October 2019.
If you have any questions or would like to know more about the Cromwell Direct Property Fund, please visit www.cromwell.com.au/DPF or contact Cromwell’s Investor Services Team on 1300 268 078 or email email@example.com.
Cromwell Funds Management Limited ABN 63 114 782 777 AFSL 333214 (CFM) has prepared this update and is the responsible entity of, and the issuer of units in, the Cromwell Direct Property Fund ARSN 165 011 905 (Fund). In making an investment decision in relation to the Fund, it is important that you read the product disclosure statement dated 29 September 2017 (PDS). The PDS is issued by CFM and is available from www.cromwell.com.au/dpf or by calling Cromwell’s Investor Services Team on 1300 268 078. Applications for units in the Fund can only be made on the application form accompanying the PDS. This update has been prepared without taking into account your objectives, financial situation or needs. Before making an investment decision, you should consider the PDS and assess, with or without your financial or tax adviser, whether the Fund fits your objectives, financial situation or needs. CFM and its related bodies corporate, and their associates, do not receive any remuneration or benefits for the general advice given in this update. If you acquire units in the Fund, CFM and certain related parties may receive fees from the Fund and these fees are disclosed in the PDS.
Please note: Any investment, including an investment in the Fund, is subject to risk. If a risk eventuates, it may result in reduced distributions and/or a loss of some or all of the capital value of your investment. See the PDS for examples of key risks. Past performance is not indicative of future performance. Forward-looking statements in this update are provided as a general guide only. Capital growth, distributions and tax consequences cannot be guaranteed. Forward-looking statements and the performance of the Fund are subject to the risks and assumptions set out in the PDS.