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INVESTEC AUSTRALIA PROPERTY FUND - Sale of 757 Ann Street

Release Date: 11/12/2019 09:45
Code(s): IAP     PDF:  
 
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Sale of 757 Ann Street

INVESTEC AUSTRALIA PROPERTY FUND
Established in Australia and registered with ASIC as a managed investment scheme (ARSN 162 067 736)
Operated by Investec Property Limited (ACN 071 514 246; AFSL 290 909) (“Responsible Entity”)
Registered as a foreign collective investment scheme in terms of the Collective Investment Schemes Control Act
No.45 of 2003
Unit code: IAP
ISIN: AU0000046005
(the “Fund”)


SALE OF 757 ANN STREET


Introduction

Investec Property Limited as the Responsible Entity of the Fund is pleased to advise unitholders that a contract
for sale has been entered into on 11 December 2019 with Trosa AusProp Pty Ltd as trustee of Trosa AusProp
One Trust to sell the property located at 757 Ann Street, Fortitude Valley QLD (“Property” or the “Sale”).(1)

The sale price for the Property is AUD 94 000 000(2) which equates to a passing yield of 6.6%.

Use of the Sale proceeds

The Sale proceeds will be used to repay debt. It is anticipated that the Fund’s gearing following receipt of the
Sale proceeds and the repayment of debt will be approximately 21%. (3)

Rationale for the Sale

•       The Responsible Entity has previously advised that it would look to sell properties where it believes
        valuation creation has been maximised, to protect against downside risk or to improve the overall quality
        of the portfolio.
•       Given the Property presents as new, the weighted average lease expiry is just under 4.5 years and there
        is currently strong demand for high quality office properties in the Brisbane fringe office market, the
        Responsible Entity determined that it was an opportune time to consider a sale of the Property.
•       The Responsible Entity advised the market when it released its interim financial results in November 2019
        that the Property was subject to an expression of interest campaign.
•       The Responsible Entity received a strong response to the expression of interest campaign and the sale
        price of AUD 94 000 000 is 11% above the book value of AUD 85 000 000, which reflects the most recent
        directors’ valuation4 conducted in September 2019 and the most recent external valuation prepared by
        Colliers International in September 2018.
•       The proceeds from the Sale will be used to repay debt, which will further strengthen the Fund’s balance
        sheet and provide additional debt funding capacity for future acquisitions.




(1) The Property is held in Investec Australia Sub Trust No.6, a wholly-owned subsidiary of the Fund.

(2) Subject to customary adjustments. An amount of AUD 1 300 000 is being retained by the Fund’s solicitors for a period of 12 months
    following settlement in respect of a planning matter being considered by the Brisbane City Council. On the assumption that the planning
    matter is resolved, this amount will be released to the Fund on the relevant date

(3) Gearing means interest bearing liabilities (excluding debt establishment costs) divided by the total value of investment properties.
  
(4) The directors are not independent valuers and are not registered as professional valuers or as professional associate valuers in terms of
    the Property Valuers Profession Act, No.47 of 2000.

Property specific information(5)

    Registered description               Lot 20 of Registered Plan 172270
    Title                                Freehold
    Sector                               Office
    Location                             757 Ann Street, Fortitude Valley QLD
    Year built                           2014
    Site area                            1 219m²
    Lettable area                        9 422m²
    Net office rent per m²               AUD 645
    Vacancy                              0%
    WALE                                 4.3 years
    Estimated transaction costs          AUD 1 400 000(6)


(5) As at the date of this announcement.
  
(6) Includes commission payable to the selling agents, legal and other vendor due diligence costs
  
(7) Extracted from the reviewed condensed consolidated interim financial results, being rental income for six months net of outgoings,
    amortisation of incentives and IFRS straight lining. 


Effective date and financial information

The effective date of the Sale is the settlement date under the contract for sale, which is anticipated to be 1 April
2020. There are no conditions precedent to settlement.

The IFRS net operating income attributable to the Property amounted to AUD 2 797 334(7) for the six months
ended 30 September 2019. The financial information contained in this announcement has not been reviewed or
reported on by a reporting accountant.

Categorisation

The Sale is a category 2 transaction in terms of section 9 of the JSE Listings Requirements and accordingly
does not require approval by unitholders.

Johannesburg
11 December 2019

Investment Bank and Sponsor
Investec Bank Limited

Date: 11-12-2019 09:45:00
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