The Fund, a risk-adjusted closed-end vehicle, managed five property investments in Sydney, Melbourne and Canberra valued in excess of $65 million. The Fund was closed in December 2004 and is being wound-up following the sale of the final two properties in January 2008.
The Fund has reported a final return to investors of approximately 17.5 per cent per annum after fund fees and expenses including performance fees. This exceeds its original target of 15 per cent per annum after performance fees and expenses resulting in an equity multiplier of approximately 43%. For example a party investing $500,000 would receive a return of $200,000 profit over the life of the fund.
St Hilliers strategy for the Fund was to invest in a range of tenanted properties to provide an immediate income stream with St Hilliers applying its property expertise to maximise the investment value of each property.
Value adding strategies were introduced at each property as follows:
• Box Road, Taren Point, NSW – a fully leased industrial property with the potential for demolition, subdivision and re-development. St Hilliers realised a significant profit within just nine months of acquisition with a sale to an owner occupier
• Northbourne Avenue, Dickson, ACT – a fully leased commercial property with landmark planning status offering the potential for a major redevelopment for commercial or residential use. St Hilliers negotiated a development application for the redevelopment of the site to accommodate 200 residential apartments and sold the property to a local developer
• Sussex Street, Coburg, VIC – a warehouse industrial site purchased off-market on a sale and leaseback for two years. St Hilliers successfully
subdivided the property and sold with vacant possession to two owner occupiers
• Huntingdale Road, Burwood, VIC – an under-utilised site with an existing warehouse/office building. St Hilliers successfully obtained a Town Planning Permit for an additional warehouse building (6,400 sqm) and sold the property off-market
• Wells Street, Southbank, VIC – an existing commercial property, acquired on a sale and lease back and located in a re-development zone with a 60 metre height limit. St Hilliers successfully negotiated Town Planning Approval for a 250 unit residential development and sold the property by select tender with the benefit of the Town Planning Approval
The individual properties achieved returns from 12 per cent to 44 per cent.
According to Mr Nicholas Ridgwell, general manager of St Hilliers Funds Management, the final return to investors demonstrated how its value adding approach delivered superior results for wholesale investors.
“We created a quality deal flow of development and value add opportunities for the Fund and successfully managed sales to suit market windows culminating in an enhanced return to investors,” Mr Ridgwell said.
“Since launching this fund in mid 2004, we have introduced two more funds (Fund No.2 and Fund No.3) with capital raising for Fund No. 4 currently underway.
“This latest fund will be a development to core fund and marks the next phase in the expansion of our funds management platform,” he said.