The Stadia Capital EMP No.1 Trust is an unlisted property fund that invests in a metropolitan office portfolio unerpinned by strong tenant covenants. The Fund is acquiring two office buildings, Building 8 and Building 23 (80% interest) in the Garden City Office Park in Eight Mile Plains QLD.
Garden City Office Park is one of three major business parks located on the south-side of Brisbane, alongside the Pacific Motorway. The Park was constructed by OPD Developers, which is owned by Bill Henderson who remains aligned to the success of the Park as a tenant in Building 8, co-owner of Building 23 and as property manager. Core Property considers Bill Henderson’s alignment to be important to the success of the properties and relationship with key tenants. A co-ownership agreement will exist between the Trust and OPD which effectively provides each co-owner with a first right of refusal to acquire the other co-owner’s interest before it is offered for sale to a third party.
On a combined basis, the property metrics are excellent: (1) a Weighted Average Lease Expiry of 7.3 years (by income), with further options to extend; (2) 100% occupancy; (3) fixed annual rent increases of 3.0% p.a.; and (4) quality tenant covenants including the Queensland State Government, Fulton Hogan and Corporate House Services – all of which are likely to be protected from further COVID-19 impacts. Both buildings are two-level modern office buildings with total NLA of 4,907 sqm.
The Fund will have an initial term of 7.5-years with the Manager forecasting distribution yield to commence at 8.75%, with an average distribution yield of 9.5% p.a across 7.5 years on the initial investment.