Graeme Katz

Investec Australia Property Fund (“IAPF” or the “Fund”) has announced the Fund’s third acquisition since listing late in 2013, with the purchase of an office development newly completed in July 2014, strategically situated in Brisbane for $65.5 million.

The acquisition will take the portfolio to $250 million post the completion of the transaction, representing asset growth of 86% since listing.

The property, situated at 757 Ann Street in the Fortitude Valley area adjacent the Brisbane CBD, provides 10 levels of office space with a retail component on the ground floor and is fully leased, generating income underpinned by high quality tenants. It benefits from excellent road access to the CBD and Brisbane Airport and is well served by various public transport options. The area is characterised by newer office buildings, significant newly developed high-density residential accommodation and good quality restaurants and cafes.

IAPF CEO Graeme Katz said: “This major addition to the Fund is a value accretive transaction secured on attractive terms representing an initial yield of 8.35%. It aligns well with our aim to grow the asset base byinvesting in high-quality properties situated in key metropolitan areas. We are pleased with this third excellent opportunity identified in the 10 months since listing which has enabled us to effectively deploy capital towards income enhancing transactions.”

The property is let to major tenants including a 10 year lease with Ventyx (a subsidiary of the $52 billion NYSE-listed ABB Group) for 60% of the office space, a 5 year lease with Corporate House Services (“CHS”) for 20% of the office space (CHS provides an efficient alternative to traditional office spaces for small to medium users by offering potential tenants ready-to-go workspaces with complimentary support services) and the remaining space let to a related party of the vendor, SIP Australia, supported by a cash backed guarantee for the full 5 year lease period. These medium to long term leases include a contracted annual rental growth of a minimum of 3% and represent a weighted average lease expiry of 7.54 years.

The purchase of Ann Street is another off-market transaction identified and secured through the strength of the Investec Property network in Australia.

The effective date of the acquisition is expected to be before the end of October 2014, subject to the fulfilment of related conditions, including the completion of due diligence, commencement of all leases, regulatory and unitholder approval for the acquisition and the execution of the proposed rights offer.

On completion, the portfolio will comprise six industrial and five office properties; all located in established commercial precincts within major metropolitan areas.

IAPF was listed on the JSE in October 2013 under the Real Estate Holdings and Development sector and allows South African investors access to the Australian property market.

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Graeme Katz

Investec Australia Property Fund (“IAPF” or the “Fund”) last week announced the purchase of an A-grade office building in Canberra for AUD25.8m, representing an annualised property yield of 7.84%.

The Manning Clarke building – 186 Reed Street, Tuggeranong, ACT – is a single tenanted four level building with a net lettable area of 5,403m2 which recently underwent a significant upgrade and refurbishment. It also includes 158 car parks within the total 9,458m2 site area.

IAPF CEO Graeme Katz said: “The addition of the Manning Clarke building to the Fund aligns well to our strategy of investing in high-quality office properties situated in key metropolitan areas. We continue to seek growth and diversification opportunities that enhance unitholder value and contribute to sustainable income growth.”

The property is leased to The Commonwealth of Australia (Department of Human Services) on a 10-year lease expiring in February 2023 at a weighted average annual rent of AUD414m2.  The lease has two further four year options with annual contracted growth of 3.5%.

The acquisition was funded through existing debt facilities which saw the Fund’s gearing rise from 14.4% to 26.8%.  The debt has been 100% hedged at an all-in rate of 4.70% in line with the Fund’s hedging policy.  The acquisition is effective 15 May 2014 with no conditions precedent attached.

Commenting on the Canberra office market Mr Katz said: “The building is located in the Tuggeranong Town Centre where the economic viability is underpinned by the presence of various government departments, with limited examples of transference.  There is close to 0% vacancy for A and B-grade office space and the Department of Human Services leases 85,000m2of the total of 150,000m2 office space in that market.”

This acquisition marks IAPF’s second purchase since listing on the Johannesburg Stock Exchange (“JSE”) late last year. The portfolio now boasts six industrial and four office properties, all located in established commercial precincts within major metropolitan areas.

IAPF was listed on the JSE in October 2013 under the Real Estate Holdings and Development sector and allows South African investors access to the Australian property market.

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JohannesburgSA

Investec Property Australia, a division of Investec Bank (Australia) Limited, is pleased to announce its intention to list Investec Australia Property Fund (“IAPF”) on the Johannesburg Stock Exchange (“JSE”).

The Fund, which is expected to list on 24 October 2013, will be listed under the Real Estate Holdings and Development sector.

Sam Leon, Non-Executive Director of IAPF, said: “Investec Australia Property Fund is a unique investment opportunity, offering South African investors direct exposure to the Australian property market and currency. The objective of the Fund is to invest in high quality, sustainable and well diversified real estate in Australia. The Fund at the outset is a solid, sustainable platform that is well positioned for growth.”

IAPF is an Australian domiciled real estate investment trust (“REIT”) with a property portfolio which consists of a diverse mix of industrial and commercial assets (eight in total) located across Australia. The properties are well located in major metropolitan cities or established commercial precincts in Australia and have long-term leases and quality tenants in place.  Furthermore, the Fund will be managed by an experienced and entrepreneurial management team on the ground in Australia.  The team’s solid track record coupled with its ability to leverage off the Investec platform provides the Fund with scope for significant growth in the future.

Graeme Katz, CEO of Investec Australia Property Fund, said: “The Australian property market has attractive opportunities and with a long term view, we are confident in the Fund’s ability toenhance value and deliver sustainable returns and long term capital growth for prospective unitholders.”

The Fund’s board comprises of an extremely experienced team, with a mix of South African and Australian members.

Further information is available in IAPF’s pre-listing statement.

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