HOME Consortium has settled with Cromwell on its circa $27.25 million acquisition of the Parafield Retail Complex, one of the seed assets for its new Daily Needs REIT.
The Parafield Retail Complex, which was completed in May 2016 as a Masters Tenancy by Ahrens & GIC, is located within the Parafield Airport precinct, just 12 kilometres north of the Adelaide CBD. The site has a net lettable area of 15,776 sqm, with a land area of approximately 42,707 sqm, inclusive of 456 car parking spaces.
The HomeCo Daily Needs REIT prospectus noted that the REIT will acquire the ground lease of the Parafield property which has a 28 year term remaining with an option to extend.
As part of the HomeCo Daily Needs REIT listing, the Home Investment Consortium Company Pty Ltd will provide a rental guarantee to HomeCo Daily Needs REIT in respect of 4 currently vacant premises on the site, guaranteeing a minimum monthly gross income from those 4 vacant sites.
HomeCo are currently finalising tenancy arrangements on the vacant space however the guarantee will remain in place until the monthly income from binding lease agreements exceeds $234,000, or total payments under the rental guarantee reach $4.15 million or the current term of the Parafield head leases expires on 7 June 2031.
HomeCo have advised that the REIT will be investing $18.5m in Parafield, with the balance of funds for the acquisition coming from the HomeCo mitigation account put in place as part of the previous Master Head Lease arrangements.
Home Consortium’s $300 million offering for its new Daily Needs REIT was fully underwritten and expected to begin trading on the ASX later in November.
For Cromwell, the sale of the Centre out of the Cromwell Direct Property Fund was important deal for the Fund who acquired the asset from GIC on a funds through basis for $27.5m. Cromwell expected to receive an 8.3% pa yield on the passing income at practical completion.
Head of Cromwell Retail Funds Management, Hamish Wehl, said, “The Parafield sale is timely and further strengthens the Fund’s portfolio metrics.”
The Cromwell Direct Property Fund retains 10 assets with a 7.1-year weighted average lease expiry and paying investors a distribution yield of 5.9% pa.
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