Perth-based Westralia Property Trust has completed a $30 million equity raising to purchase a CBD building and broaden its holdings beyond the tourism industry.
Trust looks to limit tourism exposure
Perth-based Westralia Property Trust has completed a $30 million equity raising to purchase a CBD building and broaden its holdings beyond the tourism industry.
The raising, underwritten by Euroz Securities Limited, funds Westralia’s acquisition of the City Central Building at 166 Murray Street.
In addition, the trust raised a further $2 million for ongoing activities.
The Murray Street purchase raises the trust’s assets from $53 million to $112 million.
Kareelya Investments, the entity behind the trust, hopes to continue diversification and wants to double the trust’s assets in the next two years.
The Murray Street purchase was the first retail investment for the trust, which also owns the Broadwater resorts in Kalgoorlie and Dunsborough.
Kareelya CEO Brett Jackson said that he was very pleased with the outcome of the equity raising.
“We are delighted to have settled on arguable one of Perth’s best CBD assets,” Mr Jackson said.
“The property provides the trust with both commercial and retail income streams supported by leases with the Federal Government and Woolworths.”
Chief operating officer David Hinton said that the trust was diversifying its assets to reduce risk and exposure to tourism assets.
“We plan to accumulate more quality assets for the trust over time, reducing the percentage that the tourism assets provide,” Mr Hinton said.
The Westralia Trust was established in April 2003, and Mr Hinton said that the yield made it very attractive to investors.
A Lonsec report forecast a yield of 7 per cent for the 2004 financial year, increasing to 8.3 per cent in 2005.
This compares well with 2005 forecast yields for other similar property trusts such as Bunnings Warehouse Property Trust at 6.9 per cent, Centro Properties Group at 7 per cent, and Westfield Trust at 7 per cent.
Industry figures show that over the past 10 years, the value of listed property trusts has increased six times to $83 billion.
Colliers International research manager David Cresp said the market for LPTs was well established and popular in Australia.
“LPTs deliver a quality of property that smaller investors would never be able to afford otherwise,” he told WA Business News.
“There has been a trend in diversification of LPTs recently, and because of this diversification they can offer reasonably stable yields.
“Australia has the most advanced and mature LPT system in the world.”
UBS analyst Kim Wright said LPTs provided very competitive total returns and had half the risk of broader equity markets.
“LPTs are gaining significance in the transaction market and a key driver of the sector is the attractive and secure yield that is offered,” he said.
