Investment Opportunity Quest Apartment Hotel Pakenham Street, Fremantle Investment Highlights 120 key Quest serviced apartment development Fremantle s CBD is undergoing renewal and Sirona Capital is a major developer/ investor across a portfolio of key projects in the CBD including the flagship Kings Square development 15+5+5+5 year Quest lease with 4% fixed annual escalation (mkt reviews in yrs 6 and 11) Key development risks mitigated with all approvals in place, a well experienced builder appointed and construction finance in place Significant planning, financing and land barriers for new market entrants limiting supply side competition Attractive cash return on investment over 8 years with initial post construction cash yield of 11.5% pa increasing to 15.1% by year 6 of the Quest lease Substantial depreciation tax benefits available Prime location in Fremantle s heritage West End CBD with harbour views Acute undersupply of apartment hotel rooms in the Fremantle market, and Perth more generally Suitable for wholesale investors and SMSF s www.sironacapital.com ACN: 145 968 896 AFSL: 432 619 Sirona Capital is a leading private equity investor and funds manager focused on real estate investment and development in Western Australia. Sirona Capital has an established funds management platform and has originated a portfolio of investment and development projects valued oncompletion at in excess of $1.5B.
Prime location Strategically located development site (acquired June 2014) in the Fremantle CBD s historic West End heritage precinct, overlooking Pioneer Park. Well serviced by public transport and surrounding amenity, and walking distance to many of Fremantle s popular attractions. Fremantle is a strategic metropolitan centre and major tourism, commercial and retail hub located approximately 19km from the Perth CBD. The Fremantle CBD is undergoing significant urban and economic renewal with over $1 billion of property development projects in the pipeline, including Sirona s flagship Kings Square project. Quest lease 15+5+5+5 year Quest lease with 4% fixed annual escalations. Quest is the largest apartment hotel operator in the Australian market, with a successful well-structured business model. The Perth hotel market continues to experience an acute supply shortage and leads the nation on key industry metrics. Fremantle is strategically positioned due to its established tourism market and well diversified economy.
Construction & delivery All required planning approvals have been obtained, including City of Fremantle heritage requirements. DORIC has been appointed as the builder for the project under fixed price/time contract. DORIC Group is a leader in Perth s construction industry and has extensive experience in delivering quality projects of this scale. Sirona has undertaken extensive pre-construction works. A construction finance facility is in place with NAB. Summary Cashflow ($ 000) Development Devel mnt Phase Dec-17 Acquisition & Development costs 1 (33,052) Total (33,052) Operations Income Year 1 Jan-18 Year 2 Jan-19 Year 3 Jan-20 Year 4 Jan-21 Year 5 Jan-22 Year 6 Jan-23 Gross rental income 3,044 3,047 3,168 3,294 3,424 3,560 Total Operating Income 3,044 3,047 3,168 3,294 3,424 3,560 Less Operating Expenses Outgoings 2 - - - - - - Net operating income 3,044 3,047 3,168 3,294 3,424 3,560 Less other expenses Overheads, Management fees and costs (509) (510) (521) (532) (544) (556) Interest 3 (1,040) (1,040) (1,040) (1,040) (1,040) (1,040) Operating Cashflow 1,495 1,497 1,607 1,722 1,840 1,964 ICR 2.9x 2.9x 3.0x 3.2x 3.3x 3.4x Equity Equity (12,040) (12,040) (12,040) (12,040) (12,040) (12,040) Net sale proceeds - - - - - - 22,319 Cash available to the Trust 1,495 1,497 1,607 1,722 1,840 24,282 Cash available to current Unitholders (81.8%) 1,223 1,224 1,315 1,409 1,505 19,867 Cash available to new Unitholders (18.2%) 272 272 292 313 335 4,415 Annual Income Return to new Unitholders 11.5% 11.5% 12.3% 13.2% 14.1% 15.1% 1 Includes provision for senior finance establishment fee, valuation and legal costs associated with the term debt 2 Outgoings paid by Quest per terms of the Agreement for Lease 3 Adopted 4.95% interest rate (based on a margin of 1.95% pursuant to NAB terms and a 3.0% BBSY assumption which is derived from NAB s 5 year forward rate of 2.76%) * Note - Numbers in this table are subject to rounding Forecast return summary (Additional Equity) IRR 14.5% 6 Year Average FCF Yield 13.0% 6 Year Gross Money Return 2.5x
About Sirona Capital Sirona Capital is a successful private equity investor and funds manager focused on real estate development in Western Australia. Sirona has an established funds management platform and holds an Australian Financial Services License. Sirona employs a team of 8 full time investment professionals at its head office in West Perth. Senior exectives who will be responsible for managing the investment, include: Matthew McNeilly Managing Director Matthew McNeilly is Joint Managing Director of Sirona Capital. Matthew established Sirona Capital s real estate private equity business in 2010 and has almost 25 years of domestic and international experience in real estate acquisition, divestment, development and finance, having acted for institutions, governments, banks, corporations and family offices. Matthew previously spent 15 years in real estate investment banking where he was responsible for advisory, financing and real estate development funds management teams. In 2001, Matthew founded the Perth office of Australian corporate advisory firm, Grant Samuel. He has been an executive director to the manager and trustee companies of a number of property investment entities. Matthew holds a Bachelor of Commerce from the University of Western Australia and a Master of Business Administration from London Business School. Kelvin Flynn Managing Director Kelvin Flynn is Joint Managing Director of Sirona Capital. Kelvin has a successful track record of leading and investing significant capital and as an interim manager and adviser in complex transactions. Kelvin has previously held roles as Executive Director with the Asian Special Situations Group of Goldman Sachs, Managing Director of Alvarez & Marsal in Asia, and was an Executive Director and Partner with Ferrier Hodgson. Kelvin is presently a non-executive director of ASX listed Mineral Resources Limited, ASX listed Mutiny Gold Limited and Global Advanced Metals Pty Ltd. Kelvin holds a Bachelor of Commerce from the University of Western Australia and is a member of the Australian Institute of Chartered Accountants. Tyler Mackey Director - Real Estate Tyler is a Director of Sirona Capital. He is responsible for managing Sirona Capital s portfolio of real estate investments and funds. Tyler joined Sirona Capital in 2010 and has over 15 years experience in finance, investment banking, funds management and real estate investing and development. Prior to joining Sirona Capital, Tyler was Investment Manager at Grant Samuel where he was responsible for the day to day management of the GS Property Capital Fund as well as working within its Property Finance & Advisory business in Perth. Tyler has previously held roles in the Property Investment Banking division at Macquarie Bank along with a number of commercial banks both in Australia and the United Kingdom. Tyler holds a Bachelor of Commerce and a Graduate Diploma in Property from Curtin University.
Other Investments Kings Square, Fremantle Mixed use development in partnership with the City of Fremantle, comprising an entire city block in the heart of Fremantle s CBD. A major office/retail/car park development is proposed. The $270.0M development includes an agreement to deliver a new civic precinct including Council offices, a library, visitor centre and a refurbished Town Hall. Northern Gateway Industrial Park, Bullsbrook Purchased in April 2011, rezoned for industrial use in 2013. Adjacent to key arterial road networks and infrastructure including the future Perth - Darwin National Highway and the Midland - Geraldton rail freight line. Over 20 years, it is estimated NGIP will become home to an estimated 1.6M 2 of developed warehousing. Margaret River Shopping Centre Woolworths anchored shopping centre, plus 14 specialties, built in 2013. The centre was acquired in 2015 and will be propositioned to include a new food and beverage offer plus locally focussed retail. Heirloom by Match Fremantle (50%) Warehouse adapted multiresidential project located east of Fremantle s CBD. Development approval for 183 apartments over four levels. Interest acquired in June 2013, on completion valuation est. $128.5M. Construction commences May 2015. Adelaide Street Plaza, Fremantle Mixed use retail/office centre located in Fremantle opposite the proposed Double Tree by Hilton hotel. Completed in 2007, major tenants include Woolworths, WA State Government, Toll and Medicare. The Centre was purchased in September 2013 and is over 95% occupied. Westbridge Property Group (50%) Multi-residential real estate development company formed in June 2012. Current project pipeline includes 10th & Beaufort, Glasshouse in South Perth and Habitat Nth in North Perth, a total of 240 apartments valued at over $250.0M. For general enquiries and to request an Information Memorandum, please contact: Matthew McNeilly, Managing Director Level 2, 7 Havelock Street West Perth WA 6005 Ph: +618 9212 1200 Mob: +61 418 936 192 mmcneilly@sironacapital.com www.sironacapital.com