Stirling Property Fund

Transaction Summary

Company Overview

Stirling’s competitive advantage is its extensive experience in the investment and asset management of commercial, retail and industrial property coupled with an in-house successful development capability.

Stirling seeks to deliver enhanced income-producing investments whilst also maximizing capital value by unlocking reposition opportunities via the skills of its proven executive team.

Fund Overview

The Fund invests in a diversified portfolio of investment grade commercial property assets in high growth, accessible Regional Cities and areas within Capital Cities benefiting from long term demand drivers as a result of decentralisation, population growth, improved infrastructure and onshoring of economic activity.

This opportunity follows our first three funds which were oversubscribed and are outperforming original return targets.

The Fund acquired two industrial assets earlier this month in Newcastle’s premier industrial park and has exchanged on its third asset, MacGregor Home, a Large Format Retail centre located in south metropolitan Brisbane’s largest LFR precinct.

Investors are forecast to receive an average net cash distribution of 7.9% p.a. and total return of 9-11% p.a. IRR equating to 12.8-15.5% gross tax effective.

Investment Highlights

Income: 7.9% p.a. average net cash distribution (Fund targets average of 6.5% – 7.5% over the 4 year term of the investment)

Target IRR: 9 – 11% p.a. (12.8% – 15.5% p.a. gross tax effective for investors in the highest income tax bracket)

Strong Fundamentals: 5.9-year WALE

Growth: 3.2% p.a. fixed rental increases

Established Tenants: The Good Guys, James Lane and Port Hunter Conveyors which has a 34-year track record of successfully operating in the manufacturing services industry

Value: At a 6.0% initial yield, the assets provide a 30% return premium to similar quality industrial assets in Sydney and Melbourne

Liquidity: 4-year initial investment term with rolling 4-year terms

Debt: CBA has agreed to provide up to $100m at an all-in cost of 2.1%

Priority Locations:

Steel River industrial estate is one of the regions premier industrial parks home to Star Track Express, CSIRO, Grace Removals, Ullrich Aluminum and Jaycar

MacGregor LFR is home to Nick Scali, Super Cheap Auto, Amart, Rebel, Beacon Lighting, Snooze and TK Maxx

Both enjoy excellent exposure to major arterial roads

Performance: Large Format Retail in QLD has performed very strongly over the long term with an average annual sales growth of 7% since March 1983 outperforming NSW at 5.3% and Victoria at 5.2%

Decentralisation:

Brisbane’s population growth was 72% greater than Sydney in 2020

Large regional cities which are highly accessible stand to benefit from decentralization of employment and we believe will be targeted for increased investment over the coming decade

Independent Fund Research and Ratings Recommendation: Core Property has provided a “Recommendation” rating on the Fund which “indicates that the product has an above average grade profile across a number of Core Property’s parameters and has the potential to deliver above average risk adjusted total returns.”