We are pleased to present the Peak Diversified Property Trust No. 1 (the Trust) for your consideration.
In a challenging and competitive marketplace, Peak Equities is proud to have secured 3 independent properties as a single investment, offering investors a high degree of income security.
Each of the assets in the portfolio is fully leased, with an average remaining lease term of 12 years. 65% of the total income is payable by the NT Government, whose lease over the Darwin investment extends for a further 12.5 years (plus options).
In our opinion, these income covenants will enable the Trust to benefit from a continuing strengthening of the commercial property market, or to hold the asset through a negative cycle, should such occur.
In addition to their intrinsic quality and attractive lease terms, each of the properties is located in an area of forecast strong population and economic growth.
Diversity in asset classes supported by well-reputed private and Government tenants, increases the security of investors’ income and capital.
The respective leases have staggered expiry dates (between 6 and 15 years) which substantially mitigates any future risk of multiple vacancies in the Trust.
The location of assets (Darwin, Perth and Adelaide), limits downside exposure to any single market and further confers the benefits of single-holding land tax assessments in each case.
The Peak Diversified Property Trust No. 1 will deliver cash distributions to Unitholders at the rate of 8% per annum, payable monthly. At the same time, the Trust will be holding significant cash reserves (greater than $1.8 million) as a buffer against any unforeseen circumstances or capital expenditure requirements.
The total capital raising of approximately $42.5 million, with pre-commitments of $24 million, should enable us to satisfy the expectations of all investors.
We welcome your interest in this Trust and invite you to contact any member of our team if you would like to discuss any aspect of this Information Memorandum.
Chairman and Managing Director
APPLICATION FOR UNITS
1. The Trust - Peak Equities Pty Ltd is Trustee of the Peak Diversified Property Trust No. 1, established on 13th September 2018. The principal activity of the Trust will be the acquisition and management of three commercial investment properties at:
68–70 The Esplanade & 6 Knuckey Street, Darwin NT; 16 Frobisher Street, Osborne Park, Perth WA; and 80 Grand Junction Rd, Kilburn, Adelaide SA
2. Due Diligence - Peak Equities Pty Ltd (the Trustee) is engaged in its detailed Due Diligence investigation and analysis of the properties. Subject to the satisfactory outcome of that process, unconditional contracts are expected to be signed in mid-October 2018, with the settlement of the Adelaide property scheduled for 30 November 2018, and settlements of the remaining assets scheduled for mid-January 2019.
3. Total Purchase Price - The aggregate contract prices of the assets is $76,151,073 broken down as follows:
The Esplanade, Darwin
Frobisher Street, Perth
- Grand Junction Rd, Adelaide
4. Term of the Syndicate – The Trust will continue until the Trustee, at its discretion and in accordance with the Trust Deed, determines to sell the various investments and wind up the Trust. The Trustee has discretion to sell any of the properties at any time, if it considers that it is in the interest of Unitholders to do so.
5. Liquidity - Investors may apply to redeem part or all of their investment at any time, although the Trustee will not warrant liquidity before the 6th anniversary of the establishment of the Trust.
6. Forecast Distribution Rate - The Trustee proposes to commence monthly cash income distributions at the rate of 8.0% per annum
7. Funding – Peak Equities has received indicative approval from two major trading banks to provide funding of 55% of the total contract price, on favourable terms. Formal finance approvals will be subject to independent valuations of each property. The loan or loans will be advanced on a non-recourse basis to investors. The Trustee will raise Equity Capital from Investors of $42,500,000.
The Trustee has received pre-commitments from unrelated parties to the value of $24 million, which will ensure that funds will be available to meet the respective settlement obligations.
8. Applications for Units - Each Investor may apply for a minimum of 200 and a maximum of 4,000 Ordinary Units of $1,000 each in the capital of the Trust (Investment Value $200,000 - $4,000,000).
Applications may only be made on the Application Form attached to this Information Memorandum.
9. Offer Period - The offer will remain open until full subscription has been received. The Trustee has complete discretion as to the number of Units
(if any) to be allocated to each Applicant.
10.20% Deposit Payable - Investors must lodge a deposit equal to 20% of value of their total investment within 7 days of confirmation of the number of allocated units. Deposits funds to be paid directly into the solicitor’s trust account. (see Application Form for details)
11.Balance Payment - The remaining 80% subscription price will be payable by December 31, 2018. Investors will receive a minimum of
7 days’ written notice reminding them of the due date for payment. Unit certificates will be issued by the Trustee upon receipt of the balance payment by each investor.
12.Offer Limited to Wholesale Investors - The Offer is available exclusively to Sophisticated Investors as defined in the Corporations Act. New Investors will be required to lodge a Sophisticated Investor Certification in the form attached to this Information Memorandum.
DARWIN – 68-70 The Esplanade & 6 Knuckey St
Net Lettable Area:
Remaining Lease Term:
Northern Territory State Government
70 on lease + 14 additional spaces leased separately
Circa $12m spent by the vendor on improvements
and fit-out in securing a 15-year lease extension
68 - 70 The Esplanade (Old Admiralty House) was built in 2005 in Darwin’s premier location fronting Bicentennial Park and the Darwin Esplanade, with superb panoramic ocean and harbour views. The property being purchased by the Trust comprises 8 strata-titled office floors from ground to level 8, representing 4723 sq. metres of net lettable area. The upper floors of the building are opulent, high end, owner occupier residential apartments.
The office floors were completely refurbished in 2012 prior to the commencement of the current lease to the NT Government.
The adjoining property at 6 Knuckey Street (Heritage House) was constructed in 2013 and similarly comprises multiple levels commercial office space, comprising 2335 sq. metres, all leased to the Northern Territory Government, together with high-end owner occupier apartments.
All office floors, across both buildings were leased to the Northern Territory Government for a period of 15 Years, commencing in July 2016.
Note that the apartment floors are privately owned under separate strata titles, and do not form part of the acquisition by the Trust.
The buildings are connected by two levels of above-ground car parking. Construction is of a high standard, as required under the stringent NT construction code.
Property Details (cont.)
68-70 The Esplanade & 6 Knuckey St, Darwin
Location Highlights – Darwin
The Darwin Esplanade is considered to be the city’s premier residential address, positioned in a spectacular waterfront and park-side location. The Esplanade also houses Darwins premier hotels and restaurants. The properties are located a few doors from the Territory Parliament and government offices, adding to the long term appeal of the property to the Government tenant.
The Northern Territory’s increasing role as a major defence training and infrastructure base, its vast shale gas reserves and unique tourist appeal, are emerging as the foundations of the Territory’s economic direction, supported by major financial investment by the Federal and Territory governments.
The major committed infrastructure projects and economic stimuli include:
•$20 billion over 20 years to be spent by the Federal Department of Defence;
•$1.45 billion infrastructure fund to be spent on roads, housing, health and education;
•$200 million to be spent developing new Westin Hotel in Darwin CBD;
•$103 million to be spent on tourism over the next 5 years;
•Fracking moratorium lifted;
•Direct flights from Darwin to China.
PERTH – 16 Frobisher St, Osborne Park
Net Lettable Area:
86 on site
Remaining Lease Term:
Redink Homes and Embed International
Environmental Credentials: 5 Star NABERS Energy Rating, BEEC Certified
A modern, high quality freestanding property incorporating 3,760sqm of office accommodation and 86 car bays.
Configured to accommodate three tenancies, with two related tenancies at upper ground level with frontage and access to Frobisher Street, and one tenancy at lower ground level, accessed via Neil Street.
The building was completely refurbished in 2015 at a cost of approximately $2.55 million, finished to an exceptionally high standard and serving as the showpiece headquarters for one of Perth’s major home construction groups. The scope and quality of the recent capital enhancements will limit medium-term capital expenditure requirements and carries significant depreciation benefits.
16 Frobisher Street occupies a prominent 4,150sqm corner site, enhanced by medium to long term development potential, with foreshadowed re-zoning under the Herdsman Glendalough Structure Plan, as a mixed-use development site between 6 and 10 stories.