Wrap Text
Acquisition of Brisbane Industrial Properties
Irongate Group (JSE: IAP)
Comprising Irongate Property Fund I (IPF I, ARSN 162 067 736) and Irongate Property Fund II (ARSN 644 081 309), established in Australia and
registered with ASIC as managed investment schemes
Operated by Irongate Funds Management Limited (ACN 071 514 246; AFSL 290 909) (Responsible Entity)
IPF I is registered as a foreign collective investment scheme in terms of the Collective Investment Schemes Control Act No.45 of 2002
ISIN: AU0000046005
(IAP or the Fund)
SENS ANNOUNCEMENT
19 April 2021
Voluntary Announcement – Acquisition of Brisbane Industrial
Properties
Acquisitions
Securityholders are advised that IAP(1) has entered into agreements to acquire:
- an industrial facility to be constructed at 57 – 83 Mudgee Street, Kingston QLD
(Kingston Property); and
- an industrial facility to be constructed at Lot 24, Dunhill Crescent, Morningside QLD
(Morningside Property).
Kingston Property
The Kingston Property is being acquired on a fund-through basis. IAP has entered into:
- a nomination agreement with Tom Howard Group Pty Limited (Kingston Developer)
under which the Kingston Developer will nominate IAP for the purposes of exercising a
call option to acquire the Kingston Property from the current owner, KAT Properties Pty
Ltd (Kingston Owner), pursuant to a contract for sale of land; and
- a development agreement with the Kingston Developer under which the Kingston
Developer will undertake the development of the Kingston Property on behalf of IAP.
The effective date of the acquisition of the Kingston Property is the settlement date under the
contract for sale of land which is anticipated to occur in mid-May 2021.
Morningside Property
The Morningside Property is being acquired on a fund-through basis. IAP has entered into:
- a nomination agreement with Trigroup Alliance Pty Limited (Morningside Developer)
under which the Morningside Developer will nominate IAP for the purposes of exercising
a call option to acquire the Morningside Property from the current owner, Dunhill
Properties Pty Ltd (Morningside Owner), pursuant to a contract for sale of land; and
- a development agreement with the Morningside Developer under which the Morningside
Developer will undertake the development of the Morningside Property on behalf of IAP.
The effective date of the acquisition of the Morningside Property is the settlement date under
the contract for sale of land which, subject to certain conditions, is anticipated to occur in mid-
May 2021.
Footnote:
(1)Through wholly-owned sub trusts.
Purchase Consideration
Kingston Property
The total purchase consideration for the Kingston Property is $14,320,000 which represents an
initial yield of 5.73% (5.67% post all transaction costs). The purchase consideration comprises
an initial payment of $3,050,000 for the land with the balance to be progressively paid until
completion of construction, which is anticipated to occur in December 2021. IAP will earn a
coupon of 5.73% on the land payment and the amounts progressively paid. The purchase
consideration and all transaction costs will be funded through IAP’s existing syndicated debt
facility.
Morningside Property
The total purchase consideration for the Morningside Property is $5,932,000 which represents
an initial yield of 6.02% (5.96% post all transaction costs). The purchase consideration
comprises an initial payment of $1,252,000 for the land with the balance to be progressively
paid until completion of construction, which is anticipated to occur in November 2021. IAP will
earn a coupon of 6.02% on the land payment and the amounts progressively paid. The
purchase consideration and all transaction costs will be funded through IAP’s existing
syndicated debt facility.
Rationale for the Acquisitions
The acquisitions are consistent with IAP’s strategy of acquiring good quality industrial properties
with strong tenant covenants and long lease terms and increase IAP’s exposure to the strongly
performing industrial sector. IAP believes the Brisbane industrial market currently represents
relative value, and the acquisitions complement IAP’s recent Brisbane industrial acquisitions in
Brendale (completed in January 2021) and Pinkenba (completed in March 2021).
Kingston Property
The acquisition represents an attractive investment for IAP for the following reasons:
- The Kingston Property comprises two brand new, high quality generic warehouse and
distribution facilities due for completion in December 2021
- The Kingston Property is leased to:
- Construction Sciences Pty Ltd (2,270m²) for 10 years from completion of
construction with fixed annual escalations of 2.5%
- Waco Kwikform Limited (3,250m²) for 8 years from completion of construction
with fixed annual escalations of 3.0%
- Depreciation benefits from new construction with no near-term capital expenditure
- Attractive acquisition yield of 5.73% 2
- Fund-through structure is stamp duty efficient, saving approximately 26 basis points
- IAP will earn a coupon of 5.73% on the initial payment to the Kingston Owner under the
contract for sale of land and the amounts progressively paid to the Kingston Developer
under the development agreement from the effective date until commencement of the
lease to the tenant (anticipated to be in December 2021)
- The acquisition is accretive to IAP
Morningside Property
The acquisition represents an attractive investment for IAP for the following reasons:
- The Morningside Property comprises a brand new, high quality generic distribution
warehouse and office accommodation due for completion in November 2021
- The Morningside Property is leased to 3M Australia Pty Limited, ultimately owned by US-
based conglomerate 3M Company (NYSE:MMM) and will be used as 3M’s Queensland
head office and last mile distribution facility
- The lease term is 10 years from completion of construction with fixed annual escalations
of 3.0%
- Depreciation benefits from new construction with no near-term capital expenditure
- Attractive acquisition yield of 6.02%
- Fund-through structure is stamp duty efficient, saving approximately 27 basis points
- IAP will earn a coupon of 6.02% on the initial payment to the Morningside Owner under
the contract for sale of land and the amounts progressively paid to the Morningside
Developer under the development agreement from the effective date until
commencement of the lease to the tenant (anticipated to be in November 2021)
- The acquisition is accretive to IAP
Specific Information Relating to the Properties
Kingston Property
Registered description Lots 20 and 21 on SP 110645
Title Freehold
Sector Industrial
Location 30 kms south of the Brisbane CBD
Year built 2021
Site area 21,027m2
Gross lettable area 5,520m²
Rent per m2 AUD 149/m²
Vacancy 0%
Morningside Property
Registered description Proposed Lot 24 to be reconfigured from Lot 18 on SP 309259
Title Freehold
Sector Industrial
Location 6 kms east of the Brisbane CBD
Year built 2021
Site area 2,041m2
Gross lettable area 1,016m²
Rent per m2 AUD 351/m²
Vacancy 0%
Categorisation
The acquisitions are not categorised transactions in terms of the JSE Listings Requirements.
This announcement is voluntary and for information purposes only.
Johannesburg
Investment Bank and Sponsor
Investec Bank Limited
Date: 19-04-2021 09:15:00
Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
Sharenet Sites 
