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News and Announcements

Folkeston launches new unlisted Real Estate income Fund

  • Published June 19, 2012 4:41AM UTC
  • Publisher Wholesale Investor
  • Categories Company Updates
  •  Strong Income ¡V 7.75% p.a. forecast annualised distribution yield in FY13
  • Highly Tax Effective ¡V 94% tax deferred distributions forecast to June 2013
  •  Quality Building ¡V a brand new 5,973sqm office and retail building
  •  Secure Lease Covenant ¡V 10 year office lease to Thales Australia
  •  Office Exposure ¡V located in a leading Sydney office market

Folkestone’s (ASX:FLK) real estate funds management subsidiary, Folkestone Funds Management announced today the launch of the first in its series of real estate income funds, the Folkestone Real Estate Income Fund at Sydney Olympic Park (the Fund).

The Fund will acquire the leasehold land at 7 Murray Rose Avenue, Sydney Olympic Park together with the work to date and fund the remainder of the construction works and own the completed building long term. The six level commercial building, currently being built by FDC Construction and Fitout Pty Ltd, comprises five levels of office and ground floor retail with basement car parking, is located in one of Sydney’s newest and most vibrant office markets, Sydney Olympic Park.

The Fund is a single asset, closed end unlisted real estate fund with commencing distributions to investors of 7.75 per cent per annum, paid quarterly with significant tax advantages. The Fund’s distributions are underpinned by a 10 year lease over 100 per cent of the office space to Thales Australia for their new Australian headquarters. Thales Australia is part of the Thales Group, a leading international electronics and systems group serving the defence, aerospace, space, security and transport markets globally.

7 Murray Rose Avenue is on the northern side of Murray Rose Avenue along the northern edge of the Sydney Olympic Park town centre or ‘Central Precinct’, as it is identified within the Sydney Olympic Park (SOP) Master Plan 20301. It is directly opposite the Olympic Park Railway Station and approximately 500 metres east of ANZ Stadium.

Sydney Olympic Park comprises a mixture of modern office, warehouse and commercial buildings with a “high-tech” influence and more recently, its first residential development was completed. There are now more than 140 businesses principally in the finance, government and electronic sectors employing around 13,000 employees. Major office tenants include CBA, Fujitsu, QBE, Lion Group, NSWLotteries, Energiser, Silex Solar and Samsung Electronics.

“We are delighted to be acquiring 7 Murray Rose Avenue given its excellent location, quality design and construction, the long-term lease with secure covenant to Thales Australia and the strong environmental credentials of the new building”, said Folkestone’s Managing Director, Mr Greg Paramor.

We believe investors, particularly self-managed super funds, are looking for opportunities to access strong and stable long term income from real estate through simple and transparent fund structures which have investor aligned fees,” said Mr Paramor.

“The commencing annualised forecast distribution of 7.75 per cent per annum, which grows year on year, offers a very attractive premium of 425 basis points to the current cash rate” he added. Folkestone Funds Management is seeking to raise $16.46 million from investors. The Offer opens on 20 June 2012 and is expected to close 31 July 2012. A Priority Offer of $3.0 million is being made available to Folkestone shareholders.

7 Murray Rose Avenue is being acquired from SOP 8B Pty Ltd. Settlement of the leasehold land and the work to date is scheduled for August 2012. The building is currently under construction, with Practical Completion forecast to be late 2012.

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