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Queen Street Village

Wingate Direct Property in conjunction with Shore Invest has entered into an exclusive due diligence period to acquire 100% interest in a prime mixed‐use sub regional shopping centre known as Queen Street Village, located at 129 Queen Street, Southport, QLD 4215.

Queen Street Village will be acquired for $86.55M (from a heavily discounted initial valuation) and offers security through a diverse contracted rental profile and genuine upside via a tenant remix and site optimisation strategy. Queen Street Village offers diverse underlying income via 42 existing tenants while providing a weighted average lease expiry of approximately 9.8 years (by area). Located on a 1.9‐hectare site containing 13,071sqm of lettable area, anchored by quality major tenants and with a net rental yield of 7.8% p.a.

This exceptionally located former Gold Coast Hospital site is targeting a 13.24%+ p.a. equity IRR with a conservative target of 1.6X equity multiple (4 years) and quarterly distributions commencing at 7.0% p.a. 

Investment Highlights

  • Acquisition price of $86.55M which includes the acquisition of Lot 200 (volumetric title above IGA supermarket with zoned control approval for a 20-storey residential development). 
  • Building replacement value of $118M, Lot 200 value of $3.45M & land value of $11M
  • Prime Gold Coast location being 3km north of Surfer’s Paradise, 70kms south of Brisbane and adjacent to Southport CBD. Situated in an established commercial and administrative hub, boasting medical facilities, medium density residential and education uses. Also adjacent to the Gold Coast (‘GC’) rail linking Griffith University, Gold Coast Health precinct and Gold Coast CBD.
  • Exceptional trade area with a forecast 4.1% p.a. Major Trade Area (‘MTA’) growth to 2041 and over $5.7 billion in forecast MTA retail expenditure over this period. Already Australia’s 6th largest city, the Gold Coast is expected to grow from 640,000 to 983,000 residents by 2046.
  • New development, completed in 2022 and situated on a prominent corner block. Significant potential depreciation benefits given it’s a near new development. Potential to add value through a tenant remix strategy with potential additional income sources via solar and signage.
  • Capital Growth Objective & Lease Increments: Aim to sell the property value at a conservative target of circa $120m-$130m in 4 years, giving investors a 1.6-2x return on capital invested. Fixed annual lease increases of 3-4% p.a compounding each year of the 10 year lease terms, improving revenues by 15-20%. The normal cap rate for similar retail centres is 5-6%.
  • Tenant Stability: High occupancy rate of 94.4% and a WALE of 9.8 years, anchored by national tenants such as IGA, Dendy Cinemas, Guzman y Gomez, Oporto’s, Queens Tavern and Secure Parking. All tenants are already trading profitably, ensuring sustained revenue.
  • Motivated Seller, Wingate/Shore are dealing exclusively with the receivers who have taken the asset of the developer creating the opportunity to acquire the property at a discount to Valuation.
  • Significant nearby capital expenditure pipeline including GC health precinct, major road and rail upgrades and in addition, the GC and Brisbane airport expansions.
  • Diverse income stream and income security generated from 42 tenants providing a robust cashflow free of incentives and other expenditure leakage. Strong non-discretionary tenant base (including Chemist, Vet, F&B, Medical and Dental) with limited exposure to online competition. 7.8% net income yield anticipated at acquisition, inclusive of a 24-month rental guarantee over vacancies worth $608,000p.a. to help ensure a reliable cash flow for co-investors.
  • Quarterly distributions anticipated to commence at 7.0% p.a. and anticipated to increase to 7.5% p.a.
  • Debt Facility being a non-recourse loan of 55% LVR will be secured against the asset with an interest only rate of circa 6.05% on a 4 year term.
  • Target forecast equity IRR of 13.24%+ p.a. with a conservative target of 1.6x equity multiple (4 years).

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Queen Street Village
Information Memorandum

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Commercial Property Syndication E-Book

Sophisticated Investor

In order to invest, you must be a Sophisticated Investor:

  • Gross income of $250K+ per year in each of the previous 2 years; or
  • Net assets of $2.5 million+
You will require a Sophisticated Investor Certificate from a Qualitfied Accountant in order to proceed. 

An investor who invests $500,000 or more in a syndicated offering is exempt from needing a Sophisticated Investor Certificate

Participating in Investment

This is an exceptional investment opportunity, offering strong long-term returns backed by a solid rental yield and a diverse, high-quality tenant profile. We are offering this limited opportunity exclusively to our valued clients and partners, with the initial capital call on 28th October 2024.  

The minimum investment requirement is $100,000, ensuring that you become part of a focused and committed investor group.

 If you are interested in learning more or participating in this investment, register below.

Register your interest with Queen Street Village

Registered investors will receive the Information Memorandum after Due Dilligence has been finalised.

Why Shore Invest

We understand that diversity in investment portfolios is key to long-term financial success. With Shore Invest, we offer you the chance to diversify your investment strategy by venturing into the realm of commercial property. Investors are not only attracted to the exposure of commercial assets, but also the ability to invest without needing to demonstrate personal serviceability toward the debt facilities of these assets. Most of the commercial asset acquisition will have a debt position of roughly 40-60% LVR and this loan will not have any personal guarantees associated to any of the investors and instead will be purely supported by the income of the asset itself.

This means that investors can gain access to leveraged property acquisitions where their capital is still witnessing the benefits of leverage without having to restrict their personal borrowing power.

Strategic Partnership with Wingate

Shore Financial has entered into a joint venture with Wingate, a renowned player in commercial investment with over $7 billion of capital invested across the firm’s asset management, financing and investment activities. This partnership allows us to secure and actively manage a diverse portfolio of commercial assets, leveraging the expertise and track record that Wingate brings to the table.

Wingate has demonstrated a consistent and successful track record in managing commercial assets, aligning seamlessly with the commitment to excellence that Shore Financial has upheld since its inception. Together, we are poised to create a formidable force in the market, offering you unprecedented opportunities for growth and financial prosperity.
You can trust that Shore Invest is built on a foundation of expertise, reliability, and a commitment to your financial success.

What is a commercial property syndicate?

A commercial property syndicate allows qualifying sophisticated investors to collectively own high-quality commercial real estate that would ordinarily be beyond the reach for individual investors. By pooling funds together, the commercial property syndicate can acquire a larger more valuable property with better income return and capital growth potential.

Each syndicate acquires a single designated property (single property vehicle) and is legally structured as a Unit Trust, with investors applying for Ordinary Units in The Trust. Each Unit-holder is entitled to share in the income and capital of the trust, in proportion to their unit holding.

Syndicates are typically established for a set period, usually 4-5 years, after which the property is intended to be sold. The Trustee may sell the property and wind up the trust earlier if it is in the best interest of the unit holders.

The AFSL holder acts as the Trustee of the Unit trust that acquires the property and the title to the property and mortgage finance are in the Trustee’s name. Under this structure, Investors have no liability either to the mortgagor or to any trust creditors. This form of borrowing is described as “non-recourse”.

Syndicate operators are required to hold an Australian Financial Services Licence (AFSL) which imposes comprehensive and strenuous obligations on the licensee. Principals of the licensee must possess extensive relevant experience and the appropriate degree of expertise. The conduct of a licensee is tightly regulated and the company is audited annually, with the auditors certifying that the company is complying with all of its legal and statutory obligations. The affairs and finances of each Unit Trust are also audited individually on an annual basis.

Investor returns are based on the income and capital available after fees or entitlements to the AFSL holder or its associates, with the quoted annual return reflecting the amount available to Ordinary Unit-holders.

Key Terms in Commercial Property Syndication

  • AFSL (Australian Financial Services Licence): A license required for syndicate operators, ensuring they have the necessary experience and adhere to stringent regulatory requirements.
  • Capital Growth: The increase in the property’s value over time, benefiting investors when the property is sold.
  • Distributions: the payouts that investors receive from the income generated by the real estate investment. These can come from rental income, proceeds from property sales, or refinancing.
  • Income Return: The income generated from the property, distributed to unit holders proportional to their unit holding.
  • IRR (Internal Rate of Return): the rate at which each invested dollar is projected to grow for each period it is invested.
  • Lettable Area: the floor area in a building that is to be leased and in respect of which a rent is payable
  • Leverage / Gearing / LVR: the ratio of the trust’s loan capital (debt) to the value of its equity
  • Net Passing Income: the annualised rental income being received as at a certain date, excluding the net effects of amortisation of lease incentives.
  • Non-Recourse Borrowing: A borrowing structure where investors have no liability to the mortgagor or trust creditors.
  • Ordinary Units: Units purchased by investors that entitle them to a proportional share of the income and capital of the trust
  • Rental Guarantee: an agreement between an investor and the seller guaranteeing a set rental income over an agreed period of time should the property remain vacant once purchased.
  • Tenant Remix Strategy: Optimising the composition of tenants within a development, ensuring a vibrant and appealing environment that meets both tenant and customer needs. A well-crafted leasing strategy is essential for attracting and retaining high-quality tenants and optimising occupancy rates, rental income, and tenant satisfaction.
  • Trustee: The AFSL holder responsible for managing the trust, holding the title to the property, and ensuring compliance with legal and statutory obligations.
  • Unit Trust: A legal structure in which a single property is acquired, and investors purchase units representing their share of the trust
  • Yield: a measure of returns to investors that is expressed as a percentage over a set period of time.

Benefits of Syndicated Property Investment

  • Less Initial Capital Outlay: Individual investors might not be able to acquire larger properties due to the higher initial capital outlay required. A property syndicate will avoid this issue as you can pool funds to acquire higher valued properties.
  • Grow Your Portfolio: The pool of funds will help you acquire larger properties with greater growth potential. Also, with a low initial capital outlay, you can save future funds for other investments as you will not be indebted.
  • Access More Property: Investing in more than one property is ideal. A property syndicate will allow you to invest in multiple properties to help you maximise your earnings potential.
  • Diversify Your Investment Portfolio: A property syndicate, created with pooled funds, will help you to access different types of property. Diversifying your portfolio helps you spread your risk. 
  • Save Time And Money: Investing in a professionally managed property syndicate will enable you to save time and money. As your investment is managed for you, you can spend more time considering how to grow your portfolio and less time worrying about administrative matters.
  • Regular Income Distributions: Monthly or quarterly income distributions at fixed rates throughout the term of your investment.
  • Stable Returns: By diversifying your investment in a property syndicate arrangement, you will be able to balance your risks. This will help you safeguard your investment from shocks in the market and ensure that your investment remains stable on an upward trajectory.
  • High Entry Barriers made Acceptable: Commercial properties typically demand a significant capital outlay, often placing them out of reach for the average investor. Unit trusts democratise this by pooling resources from multiple investors, enabling participation with a fraction of the cost it would take to buy a property outright.
  • Tax Advantages: These may include deductions for property-related expenses and the potential for capital gains tax concessions.
  • Tangible Asset with Potential Capital Growth: While the regular rental yield provides cash flow, the underlying property offers potential capital appreciation. In burgeoning economic hubs across Australia, commercial property values have seen consistent growth. Investing via a unit trust allows you to benefit from this appreciation, even if you only own a fraction of the asset.There is also the confidence of owning a tangible asset as opposed to shares in a compay that you’ll never see or physically hold.

Risks of Syndicated Property Investment

  • Market Volatility & Economic Factors: Economic downturns, interest rate fluctuations, regulatory changes.
  • Tenant-Related Risks: Tenant default, lease expiries & vacancies.
  • Illiquidity of Investments: Most syndicates have a projected hold period of four to eight years. Your investment will likely remain locked up for the entire duration with little opportunity to exit early.
  • Location & Market Dynamics: Location-specific risks, supply & demand imbalance.
  • Operational & Management Risks: Property management challenges and also maintenance & repair costs.
  • Regulatory Changes: Changes in government regulations, such as zoning, tax policies & environmental regulations which can impact property values & development potential.

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