28 October 2013
The $32.75 million1 Rand Distribution Centre in South Australia is on track for practical completion in late November, paving the way for the facilities’ first tenant to move in shortly thereafter.
The cold store distribution facility is one of three underlying assets which make up Cromwell’s latest ‘back to basics’ property trust – Cromwell Property Trust 12 (the Trust).
Refrigerated logistics facilities have been in high demand from investors lately. A recent research paper by CBRE2 said the demand in the sector signaled a shift from a "mining boom to a dining boom".
The report said rising sales turnover in the food retail sector had been one of the key market drivers, underpinning strong occupier demand for refrigerated logistics facilities. The Rand Distribution Centre is leased to Rand Transport, a wholly owned subsidiary of the ASX listed Automotive Holdings Group, for 20 years.
CBRE Senior Managing Director, Victoria, Matt Haddon said yields for refrigerated logistics facilities have sharpened as investors become more comfortable with the role that this asset class plays as a vital component of the infrastructure required to facilitate growth in the global supply of food and agricultural products.
"We expect this to continue and for yields on refrigerated logistics assets to compress more rapidly than other industrial assets as they come off a higher base and investors chase the strong WALE’s on offer." Mr Haddon said.
Construction of the Rand facility has been progressing smoothly with the scheduled November completion date in line with expectations.
The responsible entity of the Trust, Cromwell Funds Management Limited, is seeking to raise approximately $76 million which will be used to fund the purchase of three properties including the Rand Distribution Centre, a new office building in Dandenong, Victoria, and an existing office building in South Melbourne, Victoria.
This simple, tax effective investment underpinned by three assets backed by high quality leases to Government and blue chip tenants with a weighted average lease expiry of approximately 14.7 years3.
Based on the issue price of $1.00 per unit, the Trust is forecast to provide investors with a commencing monthly distribution yield of 7.75% per annum4, forecast to grow over time. Distributions are forecast to be 100% tax deferred5 to 30 June 2014 and partly tax deferred until the end of the forecast period in June 2017 with the potential for capital growth.
1. CBRE Valuations Pty Ltd "as if complete" valuation dated 24 June 2013
3. Calculated by gross income from the expected date of the PDS. Assumes the Rand Distribution Centre and the other construction asset owned by the Trust are completed, and the relevant leases commence, as expected.
4. Capital growth, distributions and taxation consequences are not guaranteed. Subject to the assumptions and risks contained in this PDS.
5. The proportion of distributions that are tax deferred will depend upon a number of factors (for example, building amortisation and depreciation of plant and equipment) and may vary from year to year. Deferred tax may be payable, in whole or in part, on the sale, transfer or redemption of units in the Trust. The tax deferred component of the distribution will depend on the Trust satisfying various requirements including its ability to utilise tax losses incurred in the start up phase. If the Trust does not satisfy these requirements, the tax deferred component of the distribution could be materially less.
An investment is subject to investment and other known and unknown risks, some of which are beyond the control of Cromwell, including possible delays in repayment and loss of income and principal invested. Cromwell does not guarantee any particular rate of return or the performance of its investment funds nor does it guarantee the repayment of capital or any particular tax treatment. Investors should have specific regard to the risks for the Trust outlined in its PDS when available.
This announcement sets out an intention to register and launch a new managed investment scheme: the Cromwell Property Trust 12 (the Trust). The responsible entity of, and the issuer of units in, the Trust will be Cromwell Funds Management Limited (ACN 114 782 777, AFSL 333214), a wholly owned subsidiary of Cromwell Corporation Limited.
This announcement is not financial advice or a recommendation to acquire Cromwell securities or units in the Trust. This announcement has been prepared without taking into account the objectives, financial situation or needs of any investors. Before making an investment decision prospective investors should consider the appropriateness of the information provided having regard to their own objectives, financial situation and needs and seek such legal, financial and/or taxation advice as they deem necessary or appropriate.
Before making any decision to acquire or hold units in the Trust it is important that an investor reads the Trust’s product disclosure statement ("PDS"). The PDS will be made available when the Trust is first offered to investors, which is expected to be in October 2013. The PDS, when finalised, will be available from www.cromwell.com.au or by calling Cromwell Investor Services on 1300 276 693.
This announcement contains certain "forward-looking" statements. The words "intends", "expected", "proposed", "forecast", "target", and "will" and other similar expressions are intended to identify forward looking statements. Forward-looking statements, opinions and estimates provided in this announcement are based on assumptions and contingencies which are subject to change without notice. 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 fullest extent permitted by law, Cromwell and its directors, officers, employees and advisers disclaim any obligation or undertaking to release any updates or revisions to the information to reflect any change in expectations or assumptions.