APN to store assets in lock-ups
MELBOURNE-based asset manager, APN Funds Management has launched what it claims is the first property fund investing in self-storage assets.
The initiative will see APN purchase 20 self-storage properties from operator National Storage for $125 million, with the properties — located in Queensland, Victoria and South Australia — packaged into an unlisted property trust.
APN director Howard Brenchley says the APN National Storage Property Trust will raise $62 million in equity to purchase the portfolio, with a 53 per cent gearing in the trust.
Brenchley says $8.1 million of the purchase price will be withheld subject to National Storage meeting certain financial conditions by 2008.
“We are making sure National Storage is a secure tenant… This is important when you have a single tenant and the withheld cash is an incentive to perform,” he says.
Brenchley says the trust has full pre-emptive rights if anything should go wrong with the tenant, which will provide it with “an added layer of security”.
APN is forecasting an initial yield of 9 per cent rising to 9.4 per cent in 2006, with income for the trust secured by 15-year leases to National Storage, as well as the rent paid to the tenant by the individual renters.
The trust will close on November 10 and has a minimum investment of $10,000.
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