Stockland property group has closed the single-asset Stockland Direct Office Trust No 1’s $A66.5 million offer ahead of schedule after an overwhelming response from small investors since it opened on 14 September.
Stockland is a stapled security, combining a property investment trust & a management & development company. The unlisted funds business was established in January and Waterfront Place was its first offering.
The trust was launched on 14 September to buy a 50% interest in Waterfront Place in Brisbane. Stockland & Westpac Bank bought the property from AMP through a subsidiary in February with the intention of syndicating the bank’s half, while Stockland Trust retained the other half.
Stockland Unlisted Property Funds chief executive Robb Macnicol said the response was extraordinary, but reflected the high demand for high-quality unlisted products. He said Stockland would consider more direct property investment opportunities for both retial & wholesale investors.
More to the point, Stockland & Westpac made the offer particularly attractive.
Investors were offered ungeared $A1 units or geared units, through Westpac Investment Bank, with 60% payable in June 2010. Property Investment Research said in its report on the offering, the fund’s rating under the ungeared option was assisted by the high tax advantage of 100% for the expected initial 6-year term of the syndicate.
“As the distribution is 100% tax effective, the yield grosses up to 11.9% on a post-tax basis for an investor on the top marginal tax rate. Downside risk to investor income has been mitigated by $A3 million of rental income support from the vendor until June 2008.”
The 39-storey 10-year-old building was valued at $A291 million in June, on a 7.68% initial yield. It has 58,885mÂ² gross lettable area, with a value of $A4942/gross mÂ², and 493 basement parking spaces.