Graeme Katz, CEO of IAPF
Investec Australia Property Fund (“IAPF”) today announced the acquisition of an AUD 18.15 million property in one of Brisbane’s core industrial nodes. The acquisition brings the value of the Fund’s total portfolio to AUD 379.45 million. The acquisition will be fully funded with debt which will take the Fund’s gearing to 33%.
The 21,930 square metre site is located at 85 Radius Drive, Larapinta, 21km from Brisbane’s CBD, and comprises 10,088 square metres of recently constructed warehouse and associated office. Larapinta is considered the premier southern industrial precinct of Brisbane with other tenants in the surrounding area including Woolworths, Toll, BP, Hafele and Toyota. The precinct boasts significant institutional ownership with Dexus, GIC and Growthpoint all owning property in the area. The precinct is well serviced by road connections with easy access to the Logan motorway which links to the Pacific motorway connecting Brisbane to the Gold Coast.
The property is 100% leased until December 2021 to Coil Steels Pty Limited which is part of the Kanji Group, an established family-run building materials business that owns several successful subsidiaries across Australia including Metroll, Tasmania Mines, National Masonry and Pipemakers. The business operated from the property comprises stocking, processing and distributing an extensive range of steel products including heavy plate, structural beams, tubular products and a wide range of sheet and coil products.
Rents at the property are AUD 141 per square metre, which is consistent with rents in the precinct, and the lease includes annual rental increases linked to CPI which has averaged 2.64% over the past 10 years. The initial passing yield on acquisition is 7.80% pre-transaction costs which represents an attractive spreads over the Fund’s borrowing costs of 4.15%.
IAPF CEO Graeme Katz said: “The acquisition is the eighth property acquired by the Fund since our rights issue late last year, reflecting management’s ability to unlock off-market transactions in a very competitive market. The acquisition also reaffirms management’s commitment to the FY16 guidance on distribution growth.
“We believe the addition of the Larapinta property to the Fund’s portfolio aligns well with our strategy of investing in well-located assets underpinned by long term leases.”
IAPF, listed on the Johannesburg Stock Exchange under the Real Estate Holdings and Development sector, provides South African investors with direct access to the Australian commercial property market.