14 December 2018
The Cromwell Direct Property Fund (Fund) has secured its fifth direct commercial property asset, located at 420 Flinders Street, Townsville for an acquisition price of $63.5 million which reflects a passing yield of 7.3%.
The property is an elevated 1,506 square metre (sqm) site comprising an eight-level office building with approximately 7,929 sqms of net lettable area.
The property’s major lease is to Energy Queensland Limited (Energy Queensland), a Queensland Government-owned electricity provider. Energy Queensland occupies 7,343 sqm of the building on a 15-year lease, with the National Australia Bank and Energy Shot Pty Ltd occupying the remaining tenancies.
Energy Queensland employs 7,355 people and is administered from its head office at 420 Flinders Street in Townsville, Queensland.
The property has a Weighted Average Lease Expiry (WALE) of 9.6 years, which in turn increases the Fund’s overall WALE from 8.7 to 8.9 years.
The acquisition takes the Fund’s direct property portfolio to $183.6 million and the look-through property exposure to nine assets, with a total investment value of $273 million.
The addition of the 420 Flinders Street property asset will increase the earnings of the Fund. Post the acquisition, direct gearing of the Fund will increase from nil to 20% and look through gearing from 12% to 28%.
The acquisition is due to settle on 21 December 2018.
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.