CorVal Property Trust No 2
The CorVal Property Trust No 2, via investments in two separate trusts, had an exposure to two property assets, namely:
- 100% of 17 Moore Street, Canberra, ACT; and
- 49.99% of the Australian Red Cross Blood Service property located at 17 O’Riordan Street, Alexandria, NSW.
17 Moore Street comprises a seven level office building located in the Canberra CBD, with 100% of the property income secured by a lease to the Australian Commonwealth Government (Department of Education, Employment and Workplace Relations (DEEWR)) through until October 2016.
The building has recently been upgraded in 2008 at an estimated cost of $6.4 million with a modern fit-out and an energy efficient plant to provide an up to date functional office building. The building currently has a 4.5 stars NABERS rating.
17 O’Riordan Street comprises a three level purpose built commercial office, warehouse and laboratory facility that was recently completed in January 2011 and is fully leased to the Australian Red Cross Blood Service through until January 2031.
The lease obligations of the Australian Red Cross Blood Service are supported by a deed of indemnity with the Commonwealth of Australia, acting through and represented by the National Blood Authority, a Commonwealth agency established under the National Blood Authority Act 2003.
- forecast income distributions of 8.5% per annum (annualised) for the eleven months to 30 June 2012 and 8.7% per annum for the financial year to 30 June 2013 (subject to the assumptions and risks outlined in the PDS);
- regular income distributions supported by two long-term Commonwealth Government leases over 100% of the net property income;
- weighted average lease expiry profile of 12.3 years (by income as at June 2011);
- rental growth from fixed annual rent reviews;
- an unlisted simple to understand structure with a moderate level of ‘look-through’ Trust gearing of 47.0%;
- a clearly defined future exit strategy; and
- commitments from us with respect to what we will and won’t do as the responsible entity of the Trust.
To provide a clear alignment of interest between both us and investors, an entity in which Andrew Roberts has a beneficial interest owns the other 50.01% interest in the investment vehicle that owns the Australian Red Cross Blood Service property.
In addition, we have elected to receive Units in the Trust in lieu of cash management fees for the initial twelve month term of the Trust, to provide a further alignment of interest with our investors.