Real Estate fund

The IIG K5 Property Trust

An IRR of 11.2% pretax, post-fees target, and a tax-effective yield of 7.6% targeted post-completion.

Published: May 28, 2018

About the Trust

Trust that owns 25 King, a brand new A-grade commercial office tower in the heart of the $2.9 billion Brisbane Showgrounds redevelopment.

25 King boasts innovative design and state-of-the-art technology, with extensive use of engineered timber.

The developer, Lendlease, has delivered an office tower of the highest quality with leading sustainability features.

25 King is the Queensland headquarters of Aurecon, a global engineering and environmental consultancy firm, who has committed to occupy the building as its anchor tenant for 10 years.

Investment Features

  • Brand new asset by a world class developer;
  • Innovative engineered timber, delivering environmental performance and amenity;
  • A-Grade office building with first-class facilities and abundant natural light;
  • Attractive minimum WALE of 7.2 years on completion1;
  • Anchor Tenancy from Aurecon, a global engineering consultancy;
  • 100% Tax-deferred distributions, for 3+ years;

Investment Objectives

  • Provide unitholders with an attractive, tax-advantaged yield over the trust term, underpinned by strong lease covenants in a high quality commercial real estate asset;
  • Actively manage property to generate a consistent income return, with potential for capital growth, and maintain globally leading sustainability credentials;
  • Seek an exit that delivers an attractive overall return; expected to occur approximately five years post-completion.

Investment Strategy

  • Fund through construction and ultimately acquire 25 King, an A-Grade commercial office building with Aurecon as the anchor tenant occupying 43.5% of NLA, and the remaining income secured by a rental guarantee from the ASX top 50 listed company Lendlease until first leasing of the remaining area;
  • Actively manage the asset to maximise its capital value;
  • Achieve and maintain the 6 Star Green Star rating and 5 Star NABERS rating, optimising sustainability outcomes across energy, water, indoor environment and waste;
  • Achieve WELL Silver rating;
  • Work with Developer Lendlease to secure new tenants for remaining 56.5% of space to further enhance the 7.2 year Weighted Average Lease Expiry;
Key Features
Target IRR 11.2% Target IRR Post Completion, (post fees & pre-tax)
Target Yield 7.6% p.a. Target average yield for five year period post-completion
Target Yield 6.9% p.a. Target yield through practical completion (expected 31 October 2018)

The Asset

Under Management

25 King

A brand new A-grade commercial office tower in the heart of the $29 billion Brisbane Showgrounds
More on this asset

Trust Snapshot

  • Investment Vehicle: IIG K5 Property Trust, an unlisted unit trust.
  • Total Offer Amount: $22.3 million equity
  • Target Returns(post fees, pre tax) 6.9% p.a. yield through practical completion (expected 31 October 2018)
    7.6% p.a. average yield for five year period post-completion
    11.2% p.a. target IRR post-completion
  • Minimum Investment: $100,000
  • Gearing: Initial LVR of 52.7%
  • Expected Exit: Exit expected approximately five years post-completion
  • Trust Fees : 1.65% Acquisition Fee (of the Total Development Price)
    0.40% p.a. Management Fee (of the gross asset value of the Trust)
    20% Performance Fee above a 10% IRR hurdle
  • Suitability: All investors must be wholesale clients as that term is defined in the Corporations Act 2001(Cth).
Notes

1 Based on Aurecon lease (43.5% of NLA) and Lendlease rental guarantee (56.5% of NLA).
2 Total equity required for the Trust is $71.9 million, of which $49.6 million has already been raised, including a 50% interest in the Trust by Australian property develop- ment and investment company, Develco. The remaining equity available for subscription is $22.3 million, being 31% of units in the Trust.

Important Information


This summary page has been prepared and issued by Impact Funds Management Pty Ltd (ACN 138 179 914, AFSL No. 356648) (“IFM”). IFM is a wholly owned subsidiary of Impact Investment Group Pty Ltd (ACN 139 328 108). IFM in its capacity as Trustee for the IIG K5 Property Trust has issued an Information Memorandum for the Trust to set out the offer to apply for units in the Trust. A copy of the IM may be obtained by contacting IIG. The Trust is an unregistered managed investment scheme. If you are considering an investment in the Trust you must read the IM in its entirety. The information in on this page has been made available for information purposes only. It is not intended to be, and does not constitute a PDS, prospectus, short form prospectus or profile statement as those terms are defined in the Corporations Act 2001 (Cth). It does not constitute an offer for the issue, sale or purchase of any securities, or any recommendation in relation to investing in any asset. This page has been prepared without taking account of any particular investor’s objectives, financial situation or needs. For this reason, it is important that you obtain and consider the IM for the offer and seek appropriate independent professional advice before making any investment decision. This investment opportunity is only available to ‘wholesale clients’ or ‘sophisticated investors’ as defined in the Corporations Act 2001 (Cth). IFM does not receive fees in respect of the general financial product advice it provides, however it will receive fees for establishing and operating the Trust, in accordance with the Trust’s Constitution. IFM and its related entities may also receive fees for managing the assets of, and providing resources to the Trust. For more detail on fees, refer to the IM. Any investment is subject to risk, including possible delays in payment and loss of income and principal invested. Neither IFM nor any of its associates, related entities or directors guarantee the performance of any investment or the repayment of monies invested. This page contains indicative and summary information only. Information contained in this brochure may be supplemented or replaced by more complete or accurate information contained in the IM. While every care has been taken in the preparation of this document, IFM does not warrant as to the accuracy or completeness of any statement in it including, without limitation any forecasts or opinions. To the maximum extent permitted by law, IFM disclaims all liability for any loss or damage which may arise out of the provision to, or by, or use by, any person of the information contained in this document. All figures stated herein are as the date of this brochure unless otherwise stated.