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.

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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).