The portfolio is intended to consist of diversified property investments in the retail, office and industrial sectors in prime business locations across Australia (subject to suitable acquisition opportunities being available).
The following broad criteria will be applied in building the property portfolio:
- Limits will be applied to the size of a single asset relative to the overall size of the portfolio.
- A diverse mix of high quality tenants.
- Geographic diversity to manage the Group’s exposure to one city, locality or state.
- Sectoral diversification across the industrial, retail and office sectors.
The Group will seek to invest only in income earning properties and will not engage in property developments unless pre-commitment lease contracts exist with current or prospective tenants.
The Group will not undertake speculative developments or develop properties for the primary purpose of selling these to third parties.
The Group will use borrowings to partially fund its investments. It intends to continue using debt as part of its capital management strategy, with a current gearing target range of between 35% and 45%. The Group will seek to structure the Group’s borrowings to minimise exposure to refinancing and margin risk.
Interest rate management
The Group will not speculate on interest rates and therefore seeks to adopt a policy of ensuring that at least 75% of its borrowings are on a fixed rate basis.
The Group’s internalised management team will be responsible for the active management of each asset in the portfolio, to maximise its income and capital growth.
A yearly review will be conducted on each property to develop a short- and long-term strategy. The intention is to identify non-performing properties and those which no longer meet the Group’s portfolio characteristics.
Yearly budgets will be prepared across the portfolio for approval by the Board. Performance against the budgets will be reviewed quarterly, with detailed variance analysis and commentary provided on a half yearly basis.
The property team will liaise with the external property managers on matters such as rental collection, performance of tenants and other property related operational issues.
The Group will make distributions consisting of a distribution from the Trust and a dividend from the Company on a half yearly basis. This will be subject to and following directors’ consideration of financial results and the Group’s operating outlook. As the Company has minimal earnings after tax, it is anticipated that the distributions will be primarily from the Trust.
The Group will adopt a distribution policy where, to the fullest extent possible, all available net cash receipts are distributed to Securityholders (net cash receipts comprises primarily the net income received from rent on the portfolio, less any cash expenses, cash fees, and interest paid and allowances for certain provisions and accruals).
Distributions will be paid by a cheque posted to the Securityholder’s address as it appears on the register or by direct credit to the account nominated by the Securityholder for this purpose. Securityholders will also be sent distribution statements, detailing their distributions, and an annual tax statement, which will include any tax-deferred or tax-free component of their distributions.