Performance - Bancroft Road
Brownlee Street Investment Strategy
The following statement was made to potential investors in the Information Memorandum dated 22 April 2016
The Investment Manager believes that over the medium to long term Pinkenba will outperform most Brisbane industrial areas. The area’s rental growth prospects are underpinned by its proximity to the Port of Brisbane and Brisbane Airport and connectivity to all major arterial roads.
The Investment Manager is attracted to this Property for five principal reasons:
The Property is well tenanted and ideally suited to the current occupants’ needs and can therefore be expected to generate good rental income in the medium to long term.
The Tenant has occupied the site since 2012; its original lease was due to expire in 2015. In April 2015 the lease was extended to June 2018. In December 2015, the Lease was further extended to February 2021. The extensions correspond to new or extended defence contracts with the Australian Government. The Investment Manager believes that the price being paid reflects the current term of the Lease without any premium for the above average prospect of the current lease being renewed.
The current lease requires the Tenant to restore the building to its original configuration. The Tenant has made considerable changes to the Property to meet the stringent requirements of the Australian Defence Department. The Investment Manager estimates the cost of removing all of the special security features of the Property, including the “safe”, to be substantial.
The Tenant subjects the Property to very little traffic and the current wear and tear on the Property is minimal.
The base building is an attractive warehouse/office which would suit many potential alternate users. Its security features (which the Tenant is obliged to remove at the end of its lease term) would be attractive to other users who require special security features.
The Property represents a secure and growing yield on investment and a long term capital gain opportunity. Pipeclay is targeting an overall return to Investors of 11.6% over the 6 year proposed life of this investment.
Source: Information Memorandum dated 22 April 2016