Case Study - Industrial

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Asset

UGL, 91 Connors Road, Paget, Mackay

Asset Description

Industrial Heavy Engineering Facility - 30,900m2 of land with 8492m2 of buildings comprising two large industrial warehouses with multiple large gantry cranes as well as office accommodation for technical and administrative staff.  The tenant, UGL, is a subsidiary of CIMIC, a ASX Top 100 listed company providing construction, engineering and maintenance services to the infrastructure, resources and property sectors. The UGL Mackay facility focusses on maintenance work for the coal mining, electricity, CSG / LNG and rail sectors.

Timing

Acquired mid 2016

Location

Mackay, Queensland, Australia

Capital Cost (inc Acquisition costs):

AUD $10.616 million

Finance

60% LVR, Variable at 3.80%, non-recourse

Net Passing Yield on Acquisition Cost

9.22%

Distributions to Investors (paid monthly)

12.0% in FY 2016/2017, increased in FY 2017/2018 to 12.5%


What makes this a good investment?

Asset attributes

Well constructed building, very good access, excellent internal warehouse clearance. Multiple large gantry cranes.

Low site cover with option to split or expand in the future.

The Tenant

UGL parent is CIMIC – ASX top 100 company with international businesses.

UGL has been a highly regarded significant maintenance and engineeringservice provider to the Queensland mining and rail sectors for over 25 years.

UGL’s Mackay business has proven very resilient to cyclical downturns.

Commercial terms

“Triple net” lease with rent significantly below market at $105 per m2 vs average of > $200 per m2 in Mackay.

Long WALE (7 years) with fixed annual rent reviews of 3%.

Purchased for well below replacement value (estimated to be worth over $14 million vs purchase price $ 9.7 million).


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