Industria REIT (IDR) is an ASX listed real estate investment trust that is managed by APN Funds Management. Industria REIT’s portfolio comprises of 21 office and industrial properties located across the major Eastern Australian cities valued at over $552 million. These properties are delivering on the objectives of the Fund: to provide sustainable income and capital growth prospects for securityholders over the long term, which is consistent with APN’s “property for income” philosophy.
The past 12 months have been a highly active period for Industria’s management team at APN. Over $200 million of acquisition and disposal transactions have been completed, and over 30,000 square metres of leases transacted. These actions position the portfolio very strongly – occupancy is 96% (to last reporting date) with less than 10% of the portfolio leases expiring over the next two financial years providing strong visibility on distribution growth over this period.
Industria REIT recently reported a strong set of financial results at December, and is forecast to deliver an upgraded distribution of 16.0 cents per security for the year to 30 June 2017 – this equates to a 7.3%p.a1 cash yield on the current trading price of $2.20. Gearing (the ratio of Industria’s debt to its asset value) is 35%, the middle of the 30 – 40% target gearing band, which balances a conservative approach to managing the Fund whilst providing flexibility for future growth.
The acquisition of the WesTrac Newcastle facility was a major highlight over the last year. The property was acquired in September 2016 for $158.6 million, which equated to a 7.25% initial yield, a yield that will grow with annual rent reviews of 3% or inflation (whichever is higher). The property benefits from an 18 year triple net lease which is a major contributor to Industria’s overall Weighted Average Lease Expiry of 7.8 years. This acquisition followed 9 months of engagement with the vendor and their advisors to gain an exclusive position, and a dedicated period of confirmatory due diligence that coincided with an $85 million equity raise that was strongly supported by existing investors of the fund. This transaction demonstrates the patient, disciplined and dedicated approach by the team to seek out high quality properties that are well located and offer affordable occupier solutions for tenants; characteristics consistent and complementary with Industria REIT’s strategy of owning real estate that provides sustainable income and capital growth prospects over the long term.
With a 16% co-investment in Industria REIT (approximately $57 million), APN is highly aligned to the performance of the Fund. The investment case for owning office and industrial assets that provide affordable workspaces for business is strong – and we believe these properties will outperform through the cycle due to their relatively high income yields and retention levels, and when combined with an active management team that is focused on tenant engagement outcomes, we’re very confident of continuing to be able to deliver sustainable income and capital growth returns through the cycle.
For more information on Industria REIT or any of our other products, please don’t hesitate to contact APN Investor Services on 1800 996 456 between 8.30am-5.30pm (eastern standard time) Monday to Friday, or email email@example.com
This summary has been prepared by APN Funds Management Limited (APNFM) (ACN 080 674 479, AFSL No. 237500) for general information purposes only and whilst every care has been taken in relation to its accuracy, no warranty is given or implied as to the fairness, accuracy or completeness or correctness of the information. APNFM is a wholly owned subsidiary of APN Property Group Limited ACN 109 845 068. APNFM is the responsible entity and issuer of the APN Property Group products. To receive further updates and insights from the APN team, sign up for Review, our monthly email newsletter.
- 7.3% based on FY17 forecast distribution of 16.0 cents per security divided by IDR’s current trading price of $2.20 as at 27 April 2017. Distributions may include a capital gains component. Distributions are not guaranteed and past performance is not an indicator of future returns.