This article is from the Australian Property Journal archive
THE ISPT Core Fund has had yet another impressive year since it was stapled two years ago.
The fund borne in October 2005 through the stapling of ISPT No 1 and ISPT No 2, has reported a total return of 18.5% and a 50% increase in the value of assets under management to $5.5 billion.
Chief investment Robert Pepicelli said the result is positive reinforcement of the Core Fund’s strategic focus to create maximum value through active property management.
Pepicelli said the impressive return for the year was bolstered by capital growth of 11.8%, which was underpinned by profits recorded on ISPT’s development activities.
“Approximately 70% of this significant capital growth was attributable to the performance of the commercial office sector component, which has been strategically over-weighted in recent years ahead of the highly anticipated market re-rating that occurred over the past six months. This is further evidence of the success of our strategic focus for the Core Fund.
“With total portfolio vacancy of just 1.3% of net lettable area, down from 3.5% at the corresponding time from the prior year, all signs point to continued strong performance for the Core Fund,” he added.
In February 2007, ISPT adopted a revised three year strategic plan identifying regional locations of Australia as areas poised for further growth.
“The major regional centres of Queensland, New South Wales and Victoria have been identified as important to growing the Core Fund’s already strong asset base, providing further geographic diversification and attractive returns for investors,” he added.
The Core Fund made 13 investments in the period, including 12 direct property acquisitions and a 48% investment in a wholesale unlisted property trust which developed two industrial estates.
The largest acquisition was the $351.4 million purchase of 363 George Street and 24 York Street in Sydney CBD in September 2006. The fund was also active in the retail sector, with the most significant acquisition for the period being the $104.3 million purchase of Midtown Plaza in the prime retail precinct of Bourke St, Melbourne on a 7% yield.
The fund is now diversified across 89 assets following the sale of an office building at 468 St Kilda Road in Melbourne for $38.7 million and 167 Macquarie St in Sydney for $90.7 million. Both transactions settled in July 2007.
Pepicelli said the fund’s gearing level remained low at 8% as at June 30 2007, positioning it well in an uncertain interest rate environment. In addition, the fund’s gearing policy permitted gearing up to 25% of the fund’s net assets.
“ISPT raised $817.7 million in new equity for the Core Fund in the 2007 financial year and will seek additional equity commitments in October 2007.”
“With this additional capital we will continue to selectively identify acquisition opportunities and value creation activities in line with our strategic plan and continued improvement of the quality of the portfolio by disposing of non core assets in the current financial year,” Pepicelli concluded.
Australian Property Journal
