JF Meridian Trust has invested $54 million in two property acquisitions in Queensland and New South Wales.
JFM has bought the City Centre Plaza, Rockhampton for $38.0 million from Stockland and a major new distribution facility in Minchinbury, New South Wales, for $16.474 million from James Fielding Developments.
The acquisition of Rockhampton Plaza gives JFM an initial passing yield of 8.22% before acquisition costs.
City Centre Plaza is a sub-regional shopping centre located in the CBD of Rockhampton. This centre is anchored by a Target discount department store and a Coles supermarket along with 36 specialty shops with a total net area of 14,247.4 sqm.
The Target discount department store comprises 7,073 sqm and is leased until July 2015 while the Coles supermarket comprises 3,670 sqm and is leased until October 2013. The majority of the specialty shops are leased to national retailers.
The purchase of City Centre Plaza is due to settle on March 1st next year.
The Minichinbury purchase involves the acquisition of lot 17 Sargents Road.
The property has a pre-commitment by Multigroup Distribution Services, trading as Star Track Express. JFM’s total purchase price of $16.474 million upon completion of Stage 1 will reflect a yield of 8.0% on the initial income paid by STE.
The return is in line with other recent industrial investment sales in similar markets by JFM. The property currently comprises a 3.94 ha vacant site zoned general industrial with development approval for 20,000 sqm distribution and warehouse facility.
James Fielding Developments will continue its involvement with the property and has been contracted to develop the STE Facility. Stage one, a 10,500 sqm building will commence in January 2004 with completion anticipated in June 2004. STE has leased this facility for an initial term of ten years. It has also leased the surplus land adjoining for a period of five years and may require JFD to construct stage two providing an extension of 9,500 sqm within the five year time frame.
Should stage two be required, JFD will construct the additional facility with JFM acquiring the building on completion at the then assessed market value.
JFD has development rights over this land for five years and will pay an access fee of 8% of the stage two land value – 1.6724 ha at $230 sqm – during this period.
JFM will provide JFD with a financing facility to fund construction of the project at an annualised interest rate of 8.0%.
Following the acquisition of the above properties and the recent leasing transactions, JFM s average lease expiry by gross income increases from 3.45 years announced in August to 4.92 years as at December 1st.
JF Meridian Trust director Tony Pitt said the acquisition of City Centre Plaza and the new Star Track Express facility replaces the older style non performing assets, with modern high quality assets with secure income streams.
JFM has gross assets will be in excess of $600 million.
The recent rebalancing of the portfolio will support the previously stated financial year 2004 EPU and DPU forecast of 9.1 cents per unit.
“JFM will be using existing cash reserves from the sales of the two retail properties out of the CT Portfolio and the three smaller industrial facilities sold to purchase City Centre Plaza and Lot 17, Sargents Road,” Pitt concluded.
