5. Property Portfolio

Transcription

1 PROPERTY PORTFOLIO OVERVIEW The Westlawn Property Trust portfolio has thirteen key retail, commercial, logistics and development assets located in Northern New South Wales and South East Queensland. The current portfolio incorporates 59,610 sqm with an occupancy rate of 94%. Total value of Properties is $229m. PORTFOLIO SNAPSHOT 1 THE ROCKET ROBINA Value: $35,025,000 2 YAMBA FAIR YAMBA Value: $32,500, Brisbane QUEENSLAND Gold Coast 10 Tweed Heads 9 Byron Bay Lismore Ballina NEW SOUTH WALES 2 Yamba 3 EASY T CENTRE ROBINA Value: $30,000,000 4 WESTLAWN BUILDING LISMORE Value: $16,400, LEICHHARDT STREET SPRING HILL Value: $14,300,000 6 BELL CENTRAL MUDGEERABA Value: $13,500, VARSITY PARADE VARSITY LAKES Value: $11,800, ALEXANDRA PLACE MURARRIE Value: $11,150,000 9 BYRON FAIR BYRON BAY Value: $9,500, BLUNDELL BOULEVARD TWEED HEADS SOUTH Value: $8,700, BELL-ARE AVENUE NORTHGATE Value: $8,475, TAMAR VILLAGE BALLINA Value: $3,200, EPIQ LENNOX HEAD Value: $31,690,000

2 14 The Rocket ROBINA TOWN CENTRE DRIVE, ROBINA, QLD Yamba Fair 1-3 TREELANDS DRIVE, YAMBA, NSW The Rocket is a free-hold commercial building comprising 12,781 sqm of retail and commercial accommodation completed in There are three components to the site, being the main 16 storey tower, a two storey annex building along the northern boundary and a one storey annex building along the southern boundary fronting Robina Town Centre Drive. The Rocket is of a modern, contemporary design with defined edges and a distinct silhouette. The condition of the building is near new, as to be expected for a building of this age. The building is functionally effective and offers A-grade office accommodation, being regarded as one of the premier office buildings on the Gold Coast. Yamba Fair is a $32.5 million neighbourhood shopping centre which incorporates a Coles supermarket, Target Country department store, a mini-major (Priceline Pharmacy), discount variety store (The Reject Shop), 19 specialty stores and an ATM. In addition, there is a free-standing commercial building leased to Centrelink. The centre currently presents to a good standard of retail accommodation commensurate with its recent refurbishment and year of construction. Treelands Drive, on which the property is located, is an established commercial and retail precinct with further surrounding developments predominantly comprising residential housing. The centre currently has limited competition in Yamba and nearby townships. Value Income Total Occupancy (% lettable area) National Disability Insurance WMS Accountants $35,025,000 (50% of total value) $3,045,340 (50% of total value) 12,781 sqm 89% Multi-tenanted (37 current 2, % November , % June 2018 GCCC % March 2019 Value $32,500,000 Income $2,645,862 7,170 sqm Occupancy (% lettable area) 97.3% Coles Supermarkets Australia Pty Ltd Multi-tenanted (21 current 3, % April 2026 Target Country 1, % Priceline Pharmacy % November 2021 December 2020

3 15 Easy T Centre CHRISTINE AVENUE, ROBINA, QLD Westlawn Building 29 MOLESWORTH STREET, LISMORE, NSW The Property comprises 5,880sqm net lettable area with 36 tenancies arranged over three separate titles. The centre was completed in The centre currently incorporates an IGA with 35 speciality stores. The Property is located in the retail destination suburb of Robina and is in close proximity to the Robina Town Centre. The Property comprises three separate allotments within the central business district of Lismore. 29 Molesworth Street is improved with a seven-level office building with a 4.5 star NABERs energy rating, providing five levels of B-grade office accommodation and lower ground and basement level car parking. The building is configured to provide part and wholefloor office tenancies with ground level office/quasi-retail space. Glasgow Lane car parks comprise two separate allotments improved with 10 lock-up garages each. The property is situated on the main street through the central business district in Lismore, approximately 122 kilometres via the Pacific Motorway south of the Gold Coast. Lismore is a major regional centre in the Northern Rivers region of New South Wales. Value $30,000,000 Value $16,400,000 Sector Retail Income $2,245,573 Income $3,019,042 5,627 sqm 5,880 sqm Occupancy (% lettable area) 99% Occupancy (% lettable area) 94% Multi-tenanted (36 current IGA 1, % Department of Public Works December % August 2018 Flannerys % March 2018 North Coast Area Health Service Commonwealth Government ADHC Commonwealth Government Family Law Court Multi-tenanted (15 current 1, % December , % May % December 2019

4 Leichhardt Street SPRING HILL, QLD Bell Central 2 BELL PLACE, MUDGEERABA, QLD 201 Leichhardt Street is a prominent 6-storey office building located in Spring Hill, adjacent to the Brisbane CBD. Claiming a desirable elevated site, the unique triangular shaped building offers ground floor office and retail tenancies with 5 levels of well-appointed office accommodation above. Bell Central is a modern neighbourhood retail shopping centre, anchored by a 2,218 square metre Coles supermarket supported by two medical-related tenants and 12 specialties over a total area of 3,684 square metres. The Property is located within the established Gold Coast suburb of Mudgeeraba. Value $14,300,000 Income $1,190,609 Value $13,500,000 Income $1,111,395 3,119 sqm 3,684 sqm Occupancy (% lettable area) 86% Occupancy (% lettable area) 93% Multi-tenanted (15 current Multi-tenanted (12 current Logicalis % March 2018 Coles 2, % July 2021 Environmental Resources Management Australia % November 2022 CBA % September 2019 Integral Technology Solutions % July 2019

5 Varsity Parade VARSITY LAKES, QLD 45 Alexandra Place MURARRIE, QLD Varsity Lakes is a two level fully leased commercial office building with 110 car parks and 3,153 sqm floor space split over two levels. The property features secure basement carparking and excellent exposure in the Varsity Lakes business precinct. 45 Alexandra Place Murarrie is an A grade logistics and industrial complex in Murarrie, Queensland, adjacent to the Gateway Bridge east of the Brisbane CBD. Major tenants include Australia Post (StarTrack) and Tabcorp. The complex is part of the Australia Trade Coast precinct, a unique 8,000ha trade and industry region 6km from Brisbane s Central Business District. Located at the mouth of the Brisbane River, the development was designed to maximise the location s favourable air, sea, road and rail networks, including the Port of Brisbane, Brisbane Airport and the M1 Motorway. With worldclass infrastructure, strategic government partnerships, export facilities and expected growth on offer, the Australia Trade Coast is one of the fastest growing trade and industry regions in Australia. Value $11,800,000 Income $1,271,484 Value $11,150,000 Income $946,220 3,153 sqm 6,327 sqm Occupancy (% lettable area) 100% Occupancy (% lettable area) 100% Multi-tenanted (3 current Multi-tenanted (4 current Sykes Australia Pty Ltd 1, % August 2019 Australian Postal Corporation 3, % October 2022 Careflight (Qld) Limited Cerebral Palsy League of Qld % June % July 2018 Harness Energy 1, % June 2019 Tabcorp % October 2021

6 18 Byron Fair 6-8 SUNRISE BOULEVARD, BYRON BAY, NSW Blundell Boulevard TWEED HEADS SOUTH, NSW Byron Fair comprises an open style neighbourhood shopping centre which commenced trading in The Property is situated approximately four kilometres west of Byron Bay s main business area. The Property is a single level commercial building currently divided into two tenancies. The building was constructed in the early 1990s and was refurbished in The Property is leased to two government authorities, Centrelink and the NSW Department of Community Services. The Property is located within the Tweed Heads South showroom/industrial precinct. Surrounding development consists of a mixture of showroom and industrial uses with residential development located nearby. Tweed Heads South is approximately 5 kilometres south of the Coolangatta/Tweed Heads business area, and the New South Wales/Queensland border. Value $9,500,000 Income $1,069,545 Value $8,700,000 Income $989,999 2,772 sqm 2,455 sqm Occupancy (% lettable area) 100% Occupancy (% lettable area) 100% Multi-tenanted (10 current Multi-tenanted (2 current Super IGA 1, % May 2021 Department of Community Services 1,043 37% December 2021 Centrelink 1,412 63% June 2019

7 19 48 Bell-Are Avenue NORTHGATE, QLD Tamar Village 92 TAMAR STREET, BALLINA, NSW The Property was purpose built for Provet in 2006 and presents to a high corporate standard. Provet, a subsidiary of Henry Schein (a Fortune 300 company listed on the NASDAQ), is the leading veterinary supplies distribution company in Australasia. The complex is an approximate 12 minute drive from Brisbane airport and a 4 minute drive off the Gateway Motorway. Tamar Village is a $3.2 million shopping centre situated within the centre of the Ballina township, affording two street frontages. It includes nine specialty shops and a substantial showroom space. The property is one of the largest singleholding commercial sites in Ballina, and Clarence Property intends to either refurbish the existing building or redevelop the property into commercial office and retail space depending on market demand. Value $8,475,000 Income $787,416 Value $3,200,000 Income $297,270 4,651 sqm 2,136 sqm Occupancy (% lettable area) 100% Occupancy (% lettable area) 84% Single tenant Multi-tenanted (7 current ProVet Queensland Pty Ltd 4, % June 2021 Lincraft 1, % May 2018 Martin s Hot Bread % June 2019 Tamar Village Pharmacy % May 2019

8 DEVELOPMENT ASSETS 9 TREELANDS DRIVE, YAMBA, NSW This Property is a vacant, regular shaped parcel forming part of the West Yamba commercial precinct, approximately 100 metres north of Yamba Fair. The Property is valued at $620,000. Clarence Property is currently assessing the feasibility of a small commercial development on this site. A development application is with Council. EPIQ, LENNOX HEAD, NSW The Property is an hectare development site situated approximately 1.5 kilometres south of the Lennox Head town centre, an expanding coastal township approximately 10 kilometres north of Ballina and 10 kilometres south of Byron Bay on the New South Wales Far North Coast. Development Progress The Property was acquired in November 2014 for $15 million with both Concept Plan and Project Plan approvals in place from the (then) NSW Department of Planning and Infrastructure. The approvals provide for the construction of single dwelling, duplex and medium density lots, together with a neighbourhood shopping centre and a retirement village. The following table summarises development and sales activity as at the date of this PDS: RE DEVELOPMENT STAGE DESCRIPTION AND COMMENTS VALUE Release 1 Stage 1A Construction and sale of 51 residential lots. This stage has been sold and settled. Release 2 Stage 2 - Construction and sale of 82 residential lots. - All lots have been sold, for a gross sales value of $21.69m. (excl. GST). - Construction of these lots is under way, with practical completion expected in early Settlement of the 82 exchanged contracts is expected prior to 30 June At that point the development profit from this stage will be recorded in the Trust s financial statements. Release 3 Stage 3 (a) - Construction and sale of 78 residential lots. - All lots have been sold for a gross sales value of $24.718m. (excl. GST). - The DA for the construction of this stage was approved by Ballina Shire Council in September 2017, and construction has started. Based on an estimated construction timeframe of twelve months, settlements are forecast for early 2019 at which time profits from this stage of the development will be recorded. N/A $12.86 million 1 $15 million 2 Stage 3 (b) - Construction and sale of 41 mainly ocean-view residential lots. - The DA for the construction of this stage was approved by Ballina Shire Council in September Our intention is to construct these lots before taking them to the market, in order to attract a premium price. - Clarence Property expects to settle these sales during the year ended 30 June Release 4 Stage 4 - Construction and sale of 35 residential lots and 3 medium density lots. - This land surrounds the proposed shopping centre site. The DA for construction of this stage was approved by Ballina Shire Council in September Clarence Property proposes constructing and selling these lots during 2018, and settling those sales during the year ended 30 June $5.35 million 2 ¹ Directors valuation ² Valuation Taylor Byrne

9 21 RE DEVELOPMENT STAGE DESCRIPTION AND COMMENTS VALUE Balance land after releases 3 and 4 Stage 5 - Construction and sale of 87 residential lots. - A DA for this stage was lodged with Ballina Shire Council in October Construction is expected to be undertaken during the 2018/19 financial year, with settlement of sales forecast during the year ended 30 June $14 million 2 Shopping Centre (Super Lot 1) - Current State Planning approvals provide for the construction of a 5,500 sqm neighbourhood shopping centre. The site allocation is 21,060 sqm. - It is Clarence Property s intention that the Trust will construct and retain the shopping centre as an addition to its existing rent-producing retail portfolio. - The shopping centre will include a full-line supermarket, complemented by medical services and specialty shops typically associated with a neighbourhood shopping centre (e.g. coffee shop, butcher, baker, hairdresser etc.). - DA approval for the bulk earthworks for the site has been received and work has commenced, with construction of the centre itself set to start mid Lease negotiations with the anchor supermarket tenant are well advanced. Childcare Centre (Super Lot 3) - A 3,000 sqm site has been identified for construction of a 100 place (approx.) childcare centre. - The intention is the Trust will build and retain the centre as another incomeproducing rental property. - Lease and design discussions are well-advanced with a prominent childcare operator. The target is to have the centre open for intake at the beginning of Super Lot 5 - Super Lot 5 is a 4.1 ha. site currently approved for retirement living. Clarence Property s view is that a better outcome for investors will be derived from developing the site as a terrace home development, delivering quality readyto-occupy terrace homes to the market. Current designing contemplates the construction of 145 Torrens title residences. - Clarence Property is presently in discussion with the various consent authorities regarding the proposed change of use. Super Lot 7 - Super Lot 7 is a 5.59 ha. site currently approved for residential lots. Again, Clarence Property s view is that a better financial outcome for investors can be derived by seeking approval for a change to mixed use. A mixed use development could include, inter alia, live work premises, commercial premises, community facilities together with traditional residential lots. - Discussions with the various consent authorities regarding the proposed change of use are continuing. Total $47.21 million Book value as at 30 September 2017 $31.69 million ¹ Directors valuation ² Valuation Taylor Byrne Funding arrangements Source of funding: The acquisition of the development site was funded at the time from the Trust s cash reserves. Subsequent development costs have also been funded from cash reserves and from a finance facility with the Bank of Queensland. As at 30 September 2017 the Bank of Queensland finance facility was $16.5 million, with $8.7 million undrawn, to fund the completion of Stage 1B and Stage 2. Discussions have commenced for funding for Stage 3, Stage 4 and the shopping centre, with such funding expected to be on comparable terms and conditions.

10 EPIQ, LENNOX VALUATION SUMMARY This property was the subject of a valuation by Taylor Byrne as at 14 September The market value of the property was assessed on the following basis: COMPONENT Release 3 (Stages 3(a) and (3(b)) Site Value As Is subject to existing Development Approval exclusive of GST. ADOPTED VALUE $15,000,000 Release 4 (Stage 4) Site Value As If Approved exclusive of GST. $5,350,000 Balance Land after Releases 3 & 4 (Stages 5, Superlot 1, Superlot 5 and Superlot 7) As Is subject to Existing Development Approval exclusive of GST. $14,000,000 Valuation approach The assessment of individual lot values As if Complete for Releases 3 and 4 has been undertaken through the Direct Comparison method. The site values for Releases 3 and 4 have been undertaken through a reconciliation of the Residual Cash Flow and Direct Comparison approach. In order to assess the in one line value of the Balance Land on completion of Releases 3 and 4, we have undertaken a residual cashflow analysis. Under this methodology, the gross realisation of the proposed super lots on an individual sale basis has been assessed from which we have deducted selling costs, project costs, an acceptable profit margin, interest, financing and holding costs to determine the residual in one line value. This effectively represents the value of the Balance Land after Releases 3 and 4 assuming held in a single title. Positive attributes include: Low density and large lots sizes of Epiq Estate provide a point of difference to majority of other large-scale land estates. Ongoing acceptance of detached dwelling lots at the developers list prices confirming demand from the local market. Resales recorded for lots in Stage 1A demonstrate significant uplift in values since These sales also support current developer pricing. Limited existing competition with some significant proposals mooted but unlikely to compete in the immediate future. Unsold component of Release 3 in a prime position with the 41 lots likely to achieve higher than average sale prices achieved to date due to their elevated outlook. Limited childcare facilities in locale. Limited direct competition for proposed supermarket in the immediate catchment. Defined planning process for future proposals with Major Project approval set in place providing guideline. Numerous releases already approved providing structure for achievable timelines of the approval process for future stages. Negative attributes include: Cost of development for Release 5 and Super Lot 7 is unknown. The undulating contour of these sites is likely to incur increased development costs. Sloping lots likely to be less accepted by market resulting in reduced values. Likely increased competition in the medium term with numerous estates mooted within immediate catchment will start to test market depth if multiple projects come on line. Formal commitment from Woolworths yet to be completed and hence viability of proposed neighbourhood centre not verified. Limited population growth evidenced in Lennox Head over last 5 years.

11 23 Traffic management will necessitate the completion of the extension of Hutley Drive to the north prior to either the completion of the proposed Neighbourhood Centre or Release 5 land stage. Conservation areas will require ongoing management at the expense of the developer until handed over to Ballina Council. Significant issues: The assessed values using the residual analysis approach reflects a number of factors, including the adopted acquisition, holding and selling costs, interest (borrowing) rate, the number of units available for sale, assessed value of the units, adopted sale rate, and acceptable project margins. The assessed site value as is and in one line value as if complete could be impacted by a change in any of the above circumstances. The site value has been assessed in terms of the current market and should the proposed project not be undertaken in a timely manner under similar market conditions to those existing as at the date of valuation, then the value of the land may be impacted. Development sites are considered moderate to high risk in the current market and are more susceptible to market fluctuations than other forms of real estate. Critical conditions: The Stage 1B approval allows for the creation of Super Lot 1, Super Lot 3, Super Lot 5 and Super Lot 7. It does not separate proposed Release 4 and Release 5 onto individual titles with further approvals required. Development Costs for Release 3 have been provided by the developer and we have assumed these to be true and correct. We have not sighted tendered construction costs and should the construction costs differ significantly to the information provided, we reserve the right to review and amend our valuation. At the date of valuation Release 4 was not yet approved. Development Application 2017/204 was lodged with Council on 26 April We are advised that the status of the application was In Progress and was anticipated to be determined in September The application seeks development consent to create 38 residential lots, construction of a public road and associated infrastructure works (earthworks, water, sewer and drainage). This valuation is subject to formal survey of the individual lots and Super Lots. Should there be any variance in the completed lot areas then this valuation should be returned to the valuer for comment and possible review. That the proposed lots will be sold on an individual basis following an appropriate and orderly marketing campaign. We have not allowed for any escalation in costs or sale prices. Should one of these change materially, we reserve the right to review and amend our valuation. This assessment relies upon the information provided to us by Clarence Property Group whereby we have been advised that the site has been acquired under the Margin Scheme provisions and development and sale of the project is to be undertaken in accordance with those provisions with a cost base of $27,000,000. Accordingly, our assessment assumes that GST on the development costs will be assessed at 10%, to be remitted 2 months later, while GST on gross realisations will be assessed at 1/11th after first deducting the pro rata equated cost base. It is proposed that Council will place a condition of consent on each stage of the development to limit the release of Subdivision Certificate for residential allotments and the release of Occupancy Certificate for the commercial development, until it can be demonstrated that the surrounding road network has sufficient capacity. Basis of valuation This valuation is made conditional upon the following: That the property complies with all statutory requirements with respect to health, building, town planning, and fire safety regulations, and that all appropriate approvals have been obtained from the relevant authorities. That the improvements are sited within the title boundaries and without encroachment by adjoining properties. That a comprehensive test of soils on the land would not reveal contamination of any kind which could affect the utility of the property. That there are no orders of compulsory acquisition for the whole or part of the property currently issued by any Government Authority.

12 NON-CORE PROPERTY ASSETS Clarence Property continually aims to enhance and improve the assets in the Trust. Some acquisitions will increase parking, assist with complementary consumer activities and allow for expansion. These are non-core Property investments which are not material to the Trust s asset and financial performance, but which are strategic holdings from an overall perspective. PROPERTY DESCRIPTION VALUE 205 Yamba Road, Yamba, NSW 510 sqm allotment adjoining Yamba Fair Clarence Property is considering a boundary alignment to integrate the site with Yamba Fair. $285, Casuarina Close, Yamba, NSW 595 sqm allotment adjoining Yamba Fair $310, Casuarina Close, Yamba, NSW 1,300 sqm allotment adjoining Yamba Fair intended to be sold. $350, Yamba Road, Yamba, NSW 189 Yamba Road and 2 Treelands Drive Yamba are adjacent to Yamba Fair and have a combined area of 1,610 sqm. 2 Treelands Drive Yamba, NSW Development approval has been received for construction of a service station on these two parcels. Negotiations with a prospective tenant are ongoing and if successfully concluded Clarence Property proposes to proceed with this development. $1.26 million* * Directors valuation (current cost) Integrated Property Management Clarence Property provides a fully integrated in-house property service including transaction sourcing, due diligence, property management, leasing, asset enhancement and asset realisation. Some other funds outsource day-to-day management of their investors properties, whereas Clarence Property actively manages all wholly-owned property assets in-house, creating a link between investors, the assets and their tenants. This integrated model is key to maintaining investor cashflow and asset value. The asset management team oversees the strategy for each property, aiming to ensure that tenants are content, space is leased, buildings are operating efficiently and projects are delivered on time and on budget. Incorporating these functions in-house ensures assets are managed in accordance with the interests of investors and to the expectations of tenants. 5.5 INVESTMENT IN SECURITIES The Trust may also invest in other non-real property assets from time to time, including cash, receivables and interests in listed and unlisted entities which predominantly hold real property assets or mortgages secured by real property, and which meet the Trust s investment criteria. The Trust is invested in the below security: SCHEME DESCRIPTION VALUE Robina Quays Unit Trust ARSN ¹ Unlisted, registered managed investment scheme investing in real property $1.425 million² ¹ Clarence Property is also the responsible entity of the Robina Quays Unit Trust. The investment in this fund was evaluated by the Board in light of the Trust s investment criteria, and considered to be appropriate for the Trust. The investment was made on an arm s length basis. Information about the Trust s related party transactions is set out in section ² This value is based on the most recent financial statements for the entity and where applicable, the current valuation of the underlying assets owned by that entity.

13 PORTFOLIO COMPOSITION Set out below is a summary of the Trust s property portfolio as at 30 September Specific information in relation to each of the properties can be found on our website Geographical Diversification (by value) Sector Diversification (by value) South East Queensland 54% Northern New South Wales 46% Retail 39% Logistics/Distribution 9% Securities 1% Development 14% Commercial Office 37% PROPERTY SECTOR NO. PROPERTIES VALUATION LOCATION South East Queensland Northern New South Wales Sub-Total Direct Portfolio NO. PROPERTIES VALUATION Seven $124,250,000 Twelve $104,822,073 Nineteen $229,072,073 Commercial Office Five $ 86,225,000 Retail Eight $ 89,645,000 Development Four $ 33,577,073 Logistics/ Distribution/ Industrial Sub-Total Direct Portfolio Property Securities Two $19,625,000 Nineteen $229,072,073 One $1,425,000 Total Portfolio $230,497,073

14 WALE The following graph demonstrates the WALE for each leased property as at 30 September WALE By Property 6 5 Years Tweed Heads Yamba Fair 29 Molesworth St, Lismore Byron Fair Easy T Centre Tamar Village Bell Central The Rocket 5.47 Murarrie Varsity Lakes Northgate Spring Hill 1.98 Weighted Average Lease Expiry Profile The following graph demonstrates the Portfolio lease expiry profile in yearly periods calculated on the basis of income as at 30 September Lease Expiry Profile (by income) 35% 30% % Gross Income 25% 20% 15% 10% 5% 0% 23.8% 14.6% 16.1% 14.0% 31.5% FY18 FY19 FY20 FY21 Thereafter

15 TOP TENANTS BY INCOME Set out below are the largest five tenants by income in the Portfolio as at 30 September Where tenants are part of a common corporate group or government body, those details have been aggregated. TENANT PERCENTAGE OF INCOME Wesfarmers (including Coles, Target and Coles Liquor stores) 6, % Government Properties NSW (including Departments of Housing, Education, Community Services and Health) 4, % Federal Government (including Centrelink and Family Law Court) 2, % Sykes Australia 1, % Provet 4, %