Quanta Connors Road Industrial Trust
Quanta presents 91 Connors Road, an outstanding investment opportunity located in the premier industrial precinct of Mackay on a 3.1 hectare land rich industrial site.
The Quanta Connors Road Industrial Trust will be a closed-ended Trust comprising an industrial facility 100% leased to UGL. The Trust will have a term of 7 years and an anticipated investment horizon of 5 years.
The Manager will raise $9,700,000 of equity to acquire 91 Connors Road, Paget at a Purchase Price of $16,700,000, with an anticipated date for Financial Close of 28 August 2024.
Acquisition Snapshot
Quanta has agreed terms to purchase an 8,881 sqm industrial property comprising two large industrial warehouses on a 3.1 Hectare site in Paget, Mackay's premier industrial precinct. Transaction highlights include:
- Fully leased to United Group Limited (UGL), a subsidiary of HOCHTIEF, one of the world's largest infrastructure contracting groups (market cap of over €8.35 billion).
- Built-in capital and income growth resulting from current passing rent being approximately 20% below market rates.
- Significant potential for development upside with low site cover of 29% and confirmed tenant demand for additional lettable area to be built on surplus land.
- The Vendor has committed $1.5 million towards capital works upgrades, futureproofing the capital expenditure profile.
- Strong tenant retention with the facility being purpose- built for UGL who have occupied the premises since its original construction.
- 15-year triple net lease with a residual lease term of 4.70 years (by income). The triple net lease provides security of income by transferring capital expenditure risk to the tenant.
- The Paget market is tightly held and under-supplied, with minimal competing vacancies and limited new construction or development in progress.
The Trust strategy is to acquire a high quality, under rented and land rich, securely leased industrial investment with future upside well below replacement cost. The investment is strategically located in a tightly held market and is to be acquired at a price that provides a compelling return at a counter cyclical point in the cycle. The income is secured by a triple net lease to UGL, a subsidiary of HOCHTIEF, Germany's largest construction company with a market cap in excess of €8.35 billion.
Although a long-term lease exists, in the medium-term, the Manager will work with the tenant to meet their on-site expansion requirements and revert rents to market (+20%) with the aim of extending the lease term and improving capital values.
Trust Term
The Trust will have a term of 7 years with an anticipated investment horizon of 5 years. The Trust term can be extended subject to majority Unit holder approval.
Equity Raising
The Manager is seeking to raise $9.70 million (9,700,000 Units) for the Trust at an Issue Price of $1.00 per Unit.
Fundamentally good real estate
Land rich and well-located 3.1-hectare industrial site benefiting from dual frontage to Connors Road and Len Shield Street, each with their own dedicated access. The low site cover of 29% and efficient site layout provides excellent scope for future development. These characteristics make the Property highly attractive to the current occupier and market as a whole.
Under Rented
The passing rent of $141/sqm net of lettable area is well below what is achievable in the market. Recent lease deals for comparable properties reflect a rental range between $168/sqm - $321/sqm. Upon expiry of the current lease, we forecast a significant positive rental reversion.
Value-Add Potential + Future Upside
Scope to construct an additional warehouse onsite for UGL to support their future business growth has been identified. The expansion can be facilitated due to the low site cover and resulting expansion land available.
Defensive Cashflow
The income is 100% underwritten by UGL, a subsidiary of HOCHTIEF, one of the largest construction companies in the world under a triple net lease.
Future-Proofed
The Vendor has committed $1.5 million towards capital works to upgrade the Property lowering future capital costs. The lease is triple net with the tenant responsible for repair, maintenance and replacement of items which are capital or structural in nature.
Counter cyclical
We forecast 2024 to reflect the cyclical low in real estate investment as we reach peak cost of debt. Although other factors are at play, certainty in debt and equity markets will be a key catalyst to moving to a forecast expansionary phase in the cycle in FY25.
The industrial market has proven resilient against the broader economic environment with average market yields holding firm across most prime and secondary markets while transaction volumes nationally have increased by 61% between Q4 2023 and Q1 2024.
Below Replacement Cost
The Purchase Price reflects a 40% discount to replacement cost. In Paget, the high cost of construction is currently limiting the construction of competing facilities despite the low vacancy within institutional grade industrial assets. To construct the same premises today, an economic rent exceeding $220/sqm net would need to be achieved.
This discount to replacement cost continues to drive market rents upwards for existing premises, but also underscores the cost-efficiency of acquiring an existing property versus building anew.
All information has been prepared for the purpose of general information only, without reference to any particular person’s investment objectives, financial situation or particular need. Potential investors should obtain their own professional advice before making any investment decisions. Neither Quanta Investment Funds ABN 68 949 859 936 AFSL No. 477075 ), nor any of its related entities or associates, give any guarantee or provides any assurance as to the performance of an investment in or the underlying assets of, the funds, the repayment of capital or any particular rate of capital or income return. Investments are subject to investment and other risks, including delays in repayment and loss of income and capital invested. Past performance is not a reliable indication of future performance.
Nothing provided constitutes an offer or invitation in any place in which, or to any person to whom, it would not be lawful to make such an offer or invitation. The distribution of this information may be restricted by law and persons who come into possession of it who are not in Australia should seek advice on and observe any such restrictions. Any failure to comply with such restrictions may constitute a violation of applicable securities laws.
Quanta Investment Funds is a real estate fund manager based in Brisbane, Australia, with a track record of successful real estate investments over more than a decade.
- A multi-sector specialist. The majority of investments have been in office, retail and industrial sectors;
- Agnostic approach, with national exposure and expertise, seeking out the best risk-adjusted return across sectors and markets;
- Approximately 460 current wholesale investors with invested funds ranging from $50,000 to over $20 million;
- Co-investment - Quanta management team co-invests in the trusts on the same terms as other investors. Quanta management team’s exposure is currently up to 30% of existing trusts;
- Brisbane based head office with in-house Acquisitions, Property Finance, Investment Management, Property Management, Facilities Management and Investor Relations teams.
With 20 years' experience in commercial property, Stacey has been intimately involved in the growth of the group by taking a hands-on approach to transactions, fund structure, compliance, management and strong leadership of the Quanta team. It has been this hands-on approach that has ensured Stacey has gained invaluable and unparalleled experience in the operation of the business and an in-depth knowledge of property funds management.
Stacey is admitted as a solicitor of the Supreme Court of Queensland, is entered on the High Court Register of Practitioners, holds a Bachelor of Laws (Hons), a Graduate Diploma in Legal Practice and a Principal Practicing Certificate with the Queensland Law Society. Stacey holds a Certificate IV in Real Estate Practice together with Queensland, New South Wales, Northern Territory, Australian Capital Territory, Tasmania and Western Australian Real Estate Agent Licences and is a Responsible Manager of the group's Australian Financial Services Licence.
Tim joined the team in 2016 in the role of HR Manager. With a strong background in human resources and people management, as well as having worked for privately owned entrepreneurial businesses, he fitted into the team seamlessly. Tim’s knowledge of commercial and practical operational solutions, along with his understanding of commercial property, saw him promoted to the role of National Portfolio Manager in 2018. This role allowed him to gain a deeper understanding of all departments across the business, whilst putting his people management skills on show in leading a large team of property professionals.
In 2020, Tim moved into the role of HR and Corporate Operations Manager, before being promoted to Chief Operating Officer in late 2021. Tim is responsible for the growth of the corporate areas of the business including human resources, brand and communications and finance. He also has a close association with the engagement of our investors and equity raising initiatives.
Chris brings over 20 years’ experience in acquisitions, investment management and leasing. He has held senior management positions with large institutional and corporate real estate investors including QIC and Mulpha Australia Limited. Chris has been the responsible executive for portfolios greater than $2.5bn throughout his career and has been a key driver of growth in these portfolios. Chris has a strong track record of initiating and completing numerous acquisitions across several real estate sectors and markets.
At Quanta, Chris’s focus is on sourcing investment opportunities that provide investors with superior risk adjusted returns, reliable cashflows and long-term growth while also overseeing implementation of asset strategies and disposing of assets as required to achieve the best investment outcomes.
David is responsible for delivering all equity raising and communication strategies for the group, while implementing new systems and procedures in accordance with our regulatory and compliance obligations under our AFSL with ASIC. With over 9 years' of experience with the business, David’s wealth of knowledge makes him the ideal point of contact for all investors and stakeholders.
David’s strong background in information systems made him the ideal candidate when joining the Investor Relations team as a Database and Operations Analyst in 2014. David’s development within the business saw him promoted to the role of Investor Relations Manager in early 2018 – now Head of Investor Relations.
Having joined the group in 2018, Aron brings over 30 years' experience in the property and finance sectors having held various management and analytical roles with Westpac Banking Corporation, specialising in institutional property finance and capital transactions for listed and large private groups. Aron is responsible for Funds Management and Property Finance, which provide specialist fund management; investment strategy; capital structuring; and debt origination and management services.
Aron has substantial operating experience in fund management; property strategy; negotiating, analysing and structuring debt facilities and derivatives; and structured capital transactions across all property sectors.
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📲 (07) 3999 7100
📨 investorrelations@quantainvest.com.au
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