Perth-based Entrust Funds Management has announced its Esplanade Property Fund has agreed, subject to due diligence, to purchase an industrial property in Dandenong South, Victoria for $4.7 million.
The property is to be acquired with an initial yield of 7.53 per cent and is subject to a new 10-year lease with fixed annual rental increases of 4 per cent.
The lease incorporates five 5-year options to extend. The 0.45 hectare property is one of only a few sites in Victoria with a special purpose permit for the treatment and storage of clinical and pharmaceutical waste.
The proposed acquisition, which is subject to conditions including a due diligence period, has a settlement date in early December 2006.
This will be the first direct property acquisition for the Fund. Funding will be provided by a combination of bank debt and equity.
The Fund is listed on the ASX with a market capitalisation of approximately $19.2 million.
The investment strategy is to invest in good quality, good value property assets with the objective of delivering steady growth in distributions to unitholders over time.
The Fund invests in unlisted and listed property funds, direct property assets and select property development projects. This will be the Funds first direct property acquisition and will enhance both its geographic and sector diversification.
As at 30 June 2006 the Fund had net asset backing of 20 cents per unit. It is proposing to pay quarterly distributions totalling 1.6 cents per unit in 2006/07.
The Fund has invested $8 million in the Aspen Dunsborough Lakes residential subdivision project, $8 million into the Abacus Storage Fund, $1 million into the Becton Industrial Fund and has a portfolio of listed property securities valued at approximately $2.5 million.
At market close, the Fund's share price was 20.5 cents.
