FET Asset Tour Metropolitan Melbourne April 2016 0
CONTENTS WELCOME 3 SITE VISIT LOCATIONS 4 5 HAWTHORN 5 CAMBERWELL 8 PRAHRAN 11 ARMADALE 14 CHELTENHAM 17 HIGHETT 20 MANAGEMENT PROFILES 23 DIRECTORY 1 FET Asset Tour Metropolitan Melbourne - April 2016
FET Asset Tour Metropolitan Melbourne April 2016 2
WELCOME Welcome to the Folkestone Education Trust s (FET) asset tour of selected early learning centres in metropolitan Melbourne. The tour has been designed to provide participants with an insight into FET s existing early learning centres, a snapshot of its development pipeline, as well as a first-hand look into the operations of a small number of early learning centres. Focusing predominantly in Melbourne s east/south-east, the tour will highlight FET s strategy of investing on two fronts, being quality early learning centres and operators, as well as investing in sites with strong, medium term development potential with a focus on vertical and typically medium density residential development. The second value driver of providing returns through growth in underlying land values fits well with Australia s continuing population growth and increasing population densities. These factors should add further support to demand for early learning as well as the value of the underlying real estate. Nick Anagnostou Chief Executive Officer Folkestone Education Trust ASSET ACQUISITION, MANAGEMENT & INVESTMENT STRATEGY FET s expertise revolves around the acquisition, development and management of early learning real estate assets. Understanding the early learning market place, operators, and the expectations of customers, is critical to site and operator selection and ultimately, returns. The site at Armadale is a very good example of a quality operating centre in a location with very strong demand and high barriers to entry. While the site at Prahran is an older style, the location has strong demand and high barriers to entry, and the residential zoning potentially allows for longer term higher and better use as a medium density development site. The Hawthorn, Camberwell, Cheltenham and Highett development sites provide an opportunity to understand the drivers behind what FET believes are suitable sites to develop into early learning centres. FET S FOCUS FET s focus is on sites within a ~20 km radius of Australia s CBDs, rapidly expanding growth areas and opportunistic purchases. The development sites at Hawthorn, Camberwell, Cheltenham and Highett are good examples of sites that should provide strong returns from both early learning activities as well as the underlying land attributes, providing investors with the benefits of the development model, particularly around transaction cost savings. Thank you for joining the tour today. We trust that it will give you an insight into FET s assets and the operations of the early learning sector. On hand today are some of FET s management team who are happy to answer any questions you may have. 3 FET Asset Tour Metropolitan Melbourne - April 2016
SITE VISIT LOCATIONS ITINERARY Time Location 12.30 pm Depart 357 Collins Street, Melbourne 1.00 pm 140-142 Barkers Road, Hawthorn 1.30 pm 1067-1069 Toorak Road, Camberwell 2.00 pm 349 High Street, Prahran 2.30 pm 30 Kooyong Road, Armadale 3.30 pm 15 Herald Street, Cheltenham 4.00 pm 491 Highett Road, Highett * 5.00 pm Arrival back at 357 Collins Street, Melbourne * Time permitting HAWTHORN CAMBERWELL ARMADALE PRAHRAN HIGHETT CHELTENHAM FET Asset Tour Metropolitan Melbourne April 2016 4
HAWTHORN, VIC 140-142 BARKERS ROAD, HAWTHORN, VIC The proposed construction of a contemporary designed purpose built 120 place long day care centre over 3 levels with basement car parking. The site is currently vacant land located on Barkers Road, a major arterial connecting the CBD to the eastern suburbs. KEY METRICS General Land Area (sqm) 1,183 Proposed Gross Building Area (sqm) Zoning Expected Construction Commencement 960 Neighbourhood Residential August 2016* Expected Completion April 2017 ARTIST IMPRESSION Interest Proposed Long Day Care Places Proposed Car Parking Operator * Subject to DA Freehold 120 24 spaces Only About Children Lease Rent (PA) ($000) on completion 600 ARTIST IMPRESSION Outgoings (%) 100 Annual Reviews (%) Lease Type 3.25 (First 10 yrs) 3.00 (Second 10 yrs & options) Triple Net Lease Term (yrs) 20 Est. Lease Commencement 2017 Options (yrs) 10 + 10 Value Metrics Land Purchase Date Feb 2015 Land Purchase Price ($m) 3.5 Purchase Yield (%) 7.4 Expected Value on Completion ($m) 8.6 ARTIST IMPRESSION Estimated Childcare Metrics Expected Daily Fees ($) Approx. 155 Expected Hours of Operation 7.30am - 6.00pm 5 FET Asset Tour Metropolitan Melbourne - April 2016
HAWTHORN, VIC Hawthorn Demographics Population 24,760 Median Age Percentage of 0-4 Years Hawthorn Percentage of 0-4 Years Australia 31 yrs 4.7% 6.6% Median House Price $1,700,000 HAWTHORN Median Weekly Rent $650 Source: ABS, 2011; https://www.realestate.com.au as at April 2016; Forecast ID Source: MacroPlanDimasi FET Asset Tour Metropolitan Melbourne April 2016 6
HAWTHORN, VIC A high exposure vacant site located on the south-eastern corner of Xavier Avenue and Barkers Road, approximately 6 kilometres east of the Melbourne CBD. Hawthorn is a well established affluent area within Melbourne s eastern suburbs featuring a cross section of high quality predominantly period homes, units and an increasing number of apartment developments. The site has an active development permit for the construction of 8 dwellings. The site is well positioned with 8 schools within a 1 kilometre radius of the site. The site is well serviced by the nearby Hawthorn Railway Station and Barkers Road tram, which provides direct access to the CBD. The population is forecast to increase from its current figure of 24,760 to 26,754 by 2021 (an 8.05% increase over the next 5 years). NOTES 7 FET Asset Tour Metropolitan Melbourne - April 2016
CAMBERWELL, VIC 1067-1069 TOORAK ROAD, CAMBERWELL, VIC This corner site was previously a single level residential dwelling. FET in conjunction with the tenant Only About Children, are in the process of constructing a purpose built 2 level 134 place early learning centre with basement carpark together with an adjoining 3 bedroom residence. KEY METRICS General Land Area (sqm) 1,695 Proposed Gross Building Area (sqm) Zoning 953 + 123 residential space General Residential Construction Commenced August 2015 Expected Completion June 2016 Interest Proposed Long Day Care Places Car Parking Operator Freehold 134 25 spaces Only About Children Lease Rent (PA) ($000) 616 Outgoings (%) 100 Annual Reviews (%) Lease Type Lease Term (yrs) 20 3.25 (First 10 yrs) 3.00 (Second 10 yrs & options) Triple Net Est. Lease Commencement June 2016 Options (yrs) 10 + 10 Value Metrics Land Purchase Date Dec 2014 Land Purchase Price ($m) 4.0 Purchase Yield (%) 7.4 Expected Value on Completion ($m) Estimated Childcare Metrics 8.8 Expected Daily Fees ($) Approx. 155 Expected Hours of Operation 7.30am - 6.00pm FET Asset Tour Metropolitan Melbourne April 2016 8
CAMBERWELL, VIC Camberwell Demographics CAMBERWELL Population 23,300 Median Age Percentage of 0-4 Years Camberwell Percentage of 0-4 Years Australia 41 yrs 4.9% 6.6% Median House Price $1,910,000 Median Weekly Rent $650 Source: ABS, 2011; https://www.realestate.com.au as at April 2016; Forecast ID Source: MacroPlanDimasi 9 FET Asset Tour Metropolitan Melbourne - April 2016
CAMBERWELL, VIC Located on the north-west corner of Toorak Road and Eddy Street, approximately 14 kilometres south-east of the Melbourne CBD. Camberwell is a well established affluent suburb featuring a cross section of high quality predominantly period homes, units and increasingly apartment developments. Camberwell Junction is a major retail precinct 2 kilometres to the west of the site. The site is well serviced by the nearby Hartwell Railway Station and Toorak Road tram which provides direct access to the CBD and Camberwell Junction. Limited sites of this nature are available in the eastern suburbs of Melbourne, and as such there is little additional competition of a comparable quality. The population is forecast to increase from its current figure of 23,300 to 25,338 by 2021 (an 8.75% increase over the next 5 years). NOTES FET Asset Tour Metropolitan Melbourne April 2016 10
PRAHRAN, VIC 349 HIGH STREET, PRAHRAN, VIC The centre is a converted residential dwelling offering 34 places in three main rooms. High Street is a busy four lane arterial which includes a tram route to the CBD. The underlying land value for this property has increased significantly over recent years, given the site s proximity to the CBD and Chapel Street retail precinct. KEY METRICS General Land Area (sqm) 690 Building Area (sqm) 262 Zoning Construction/Refurbishment 1990 Long Day Care Places 34 Residential Growth Zone Car Parking Operator 4 spaces Guardian Early Learning Lease Rent (PA) ($000) 82 Outgoings (%) 100 Annual Reviews (%) CPI (min 3.00) Lease Type Triple Net Lease Term (yrs) 15 Expiry Dec 2022 Options (yrs) 5 + 5 Value Metrics Purchase Date Aug 2007 Purchase Price ($m) 0.97 Purchase Yield (%) 7.0 Last Valuation Current Value ($m) 1.6 Current Passing Yield (%) 5.1 Alternate Use Value Estimated Childcare Metrics Daily Fees ($) 128 No. Operating Days P.A. 255 December 2015 (Directors) 1.9 (September 2013) Hours of Operation 7.00am - 6.00pm 11 FET Asset Tour Metropolitan Melbourne - April 2016
PRAHRAN, VIC Prahran Demographics PRAHRAN Population 14,577 Median Age Percentage of 0-4 Years Prahran Percentage of 0-4 Years Australia 33 yrs 4.5% 6.6% Median House Price $1,319,500 Median Weekly Rent $610 Source: ABS, 2011; https://www.realestate.com.au as at April 2016; Forecast ID Source: MacroPlanDimasi FET Asset Tour Metropolitan Melbourne April 2016 12
PRAHRAN, VIC Regular shaped site on the north-western corner of Lewisham Road and High Street, Prahran. Prahran is an affluent inner suburban location, 5km south of the Melbourne CBD. High Street is a significant arterial connecting St Kilda Road to the south-eastern suburbs. The surrounding residential mix is generally of high quality being predominantly single fronted terrace homes, with some larger residential properties and medium density development. The site is within close proximity to Chapel Street, which offers a vast array of high end fashion retail and restaurants. Strong tenant covenant, with consistently high levels of occupation. Residential zoning potentially allows for longer term higher and better use as a medium density development site. The population is forecast to increase from its current figure of 14,577 to 14,942 by 2021 (a 2.5% increase over the next 5 years). NOTES 13 FET Asset Tour Metropolitan Melbourne - April 2016
ARMADALE, VIC 30 KOOYONG ROAD, ARMADALE, VIC In conjunction with the tenant Only About Children, FET undertook an extensive redevelopment of the existing building which was previously an Anglican Church and vicarage circa 1910. The property has been developed into a 90 place early learning centre, which opened in August 2015. KEY METRICS General Land Area (sqm) 1,538 Building Area (sqm) 868 Zoning Residential R12 Construction Timeframe 10 Months Opened August 2015 Interest Freehold Long Day Care Places 90 Car Parking 14 spaces Operator Only About Children Lease Rent (PA) ($000) 450 Outgoings (%) 100 Annual Reviews (%) Lease Type Lease Term (yrs) 20 3.25 (First 10 yrs) 3.00 (Second 10 yrs & options) Triple Net Lease Commencement July 2015 Options (yrs) 10 + 10 Value Metrics Purchase Date June 2014 Purchase Price ($m) 3.3 Construction Cost ($m) 2.7 Current Value ($m) 6.35 Estimated Childcare Metrics Daily Fees ($) 155 Hours of Operation 7.30am - 6.00pm FET Asset Tour Metropolitan Melbourne April 2016 14
ARMADALE, VIC Armadale Demographics ARMADALE Population 9,567 Median Age Percentage of 0-4 Years Armadale Percentage of 0-4 Years Australia 36 yrs 5.3% 6.6% Median House Price $2,075,000 Median Weekly Rent $695 Source: ABS, 2011; https://www.realestate.com.au as at April 2016; Forecast ID Source: MacroPlanDimasi 15 FET Asset Tour Metropolitan Melbourne - April 2016
ARMADALE, VIC Corner site with excellent exposure to Kooyong Road and St Georges Road. Approximately seven kilometres from Melbourne CBD. Armadale is a prestigious inner south-eastern Melbourne suburb adjoining Toorak, Malvern and Prahran. The suburb is predominately residential in nature with a cross section of older style high quality period homes. Close proximity to Armadale Primary School and a large number of public and private schools. Armadale railway station is approximately 500 meters to the north of the site. Strong tenant covenant, already trading at high levels of occupancy. The population is forecast to increase from its current figure of 9,567 to 10,099 by 2021 (a 5.56% increase over the next 5 years). NOTES FET Asset Tour Metropolitan Melbourne April 2016 16
CHELTENHAM, VIC 15 HERALD STREET, CHELTENHAM, VIC This corner site was previously a single level circa 1960 s brick church building together with a detached demountable structure. FET in conjunction with the tenant Only About Children, are in the process of constructing a purpose built long day care centre to provide accommodation for 86 places across two buildings. KEY METRICS General Land Area (sqm) 1,640 Proposed Gross Building Area (sqm) Zoning 550 Residential R3Z Construction Commenced August 2015 Expected Completion May 2016 Interest Proposed Long Day Care Places Car Parking Operator Freehold 86 8 spaces Only About Children Lease Rent (PA) ($000) 258 Outgoings (%) 100 Annual Reviews (%) Lease Type Lease Term (yrs) 20 3.25 (First 10 yrs) 3.00 (Second 10 yrs & options) Triple Net Est. Lease Commencement May 2016 Options (yrs) 10 + 10 Value Metrics Land Purchase Date June 2014 Land Purchase Price ($m) 1.65 Purchase Yield (%) 7.9 Expected Value on Completion ($m) Estimated Childcare Metrics 3.7 Expected Daily Fees ($) Approx. 140 Expected Hours of Operation 7.30am - 6.00pm 17 FET Asset Tour Metropolitan Melbourne - April 2016
CHELTENHAM, VIC Cheltenham Demographics CHELTENHAM Population 19,229 Median Age Percentage of 0-4 Years Hawthorn Percentage of 0-4 Years Australia 40 yrs 6.4% 6.6% Median House Price $835,000 Median Weekly Rent $450 Source: ABS, 2011; https://www.realestate.com.au as at April 2016; Forecast ID Source: MacroPlanDimasi FET Asset Tour Metropolitan Melbourne April 2016 18
CHELTENHAM, VIC Corner site location with excellent exposure, fronting Herald and Silver streets. The site is predominantly surrounded by established residential accommodation and educational facilities. The site is highly accessible within the suburb and en-route to the CBD with Cheltenham train station located two kilometres to the west and approximately 24 kilometres south east of the CBD via the Nepean Highway. Cheltenham East Primary School is located within close proximity on Silver Street as well as a small neighbourhood retail outlet. Statistics show strong demand with approximately one long day care place for every 3.5 children. Currently no development approvals for additional early learning development within the Cheltenham locality. NOTES 19 FET Asset Tour Metropolitan Melbourne - April 2016
HIGHETT, VIC 491 HIGHETT ROAD, HIGHETT, VIC It is proposed to construct a 3 level mixed use development with the top 2 levels comprising long day care providing accommodation for 135 places together with commercial space of approximately 90 sq. metres on the ground floor fronting Highett Road and car parking to the rear. KEY METRICS General Land Area (sqm) 1,167 Proposed Gross Building Area (sqm) Zoning Expected Construction Commencement 968 (incl. 90 sqm of Commercial space) Commercial B1Z May 2016 Expected Completion February 2017 Interest Proposed Long Day Care Places Car Parking Operator Freehold 135 32 spaces Only About Children Lease ARTIST IMPRESSION Rent (PA) ($000) Outgoings (%) 100 Annual Reviews (%) Lease Type Lease Term (yrs) 20 607.5 (incl. Commercial space) 3.25 (First 10 yrs) 3.00 (Second 10 yrs & options) Triple Net Est. Lease Commencement February 2017 Options (yrs) 10 + 10 Value Metrics Land Purchase Date June 2014 Land Purchase Price ($m) 3.7 Purchase Yield (%) 7.9 Expected Value on Completion ($m) 8.7 ARTIST IMPRESSION Estimated Childcare Metrics Expected Daily Fees ($) Approx. 140 Expected Hours of Operation 7.30am - 6.00pm FET Asset Tour Metropolitan Melbourne April 2016 20
HIGHETT, VIC Highett Demographics Population 7,495 Median Age Percentage of 0-4 Years Hawthorn Percentage of 0-4 Years Australia 39 yrs 7.9% 6.6% Median House Price $980,000 OAC HIGHETT Median Weekly Rent $495 Source: ABS, 2011; https://www.realestate.com.au as at April 2016; Forecast ID Source: MacroPlanDimasi 21 FET Asset Tour Metropolitan Melbourne - April 2016
HIGHETT, VIC Prominent corner location fronting Highett Road and directly opposite the Highett Shopping Centre. Surrounding developments are a mix of commercial, retail and medium to established residential dwellings. Centrally located site with Highett station approximately 300 metres to the north and Nepean Highway, a major arterial to the Melbourne CBD, 800 metres to the east. Well positioned site in terms of proximity to both public and private schools. The proposed development will be of a high quality and will capitalise on the commercial aspect of the location as well as the lack of high quality early learning within the vicinity. The population is forecast to increase from its current figure of 7,495 to 8,749 by 2021 (a 16.73%) increase over the next 5 years). NOTES FET Asset Tour Metropolitan Melbourne April 2016 22
MANAGEMENT PROFILES NICK ANAGNOSTOU Chief Executive Officer Fund Manager of FET since 2006, and CEO since 2011. Nick has over 25 years experience in the Australian commercial property and funds management industries. Previously a Director at Jones Lang LaSalle. TRAVIS BUTCHER Chief Financial Officer CFO of FET since 2008. Travis has over 15 years financial experience in Australia and overseas. Previously with PricewaterhouseCoopers specialising in transaction services and audit. MARK STEWIEN General Counsel General Counsel of FET since 2009. Over 15 years experience in corporate and real estate law in Australia and overseas. Previously a Senior Associate at Baker & McKenzie. CRAIG BLAKE Investment Manager Joined Folkestone in September 2014. Craig has extensive experience in investment, leasing and capital management in the property industry. Previously a Director at BlackRock Investment Management and Jones Lang LaSalle. NATALIE LYNCH Senior Asset Manager Senior Asset Manager of FET since 2006. Natalie has over 20 years experience in property and project management and is a qualified interior designer. Previously the national asset manager at Fernwood. KRISTINE CHASEMORE Senior Asset Manager Senior Asset Manager of FET since 2006. Kristine s experience is in property management, tenant and landlord representation. Previously with Jones Lang LaSalle. 23 FET Asset Tour Metropolitan Melbourne - April 2016
MANAGEMENT PROFILES AUSTRALIA S ONLY LISTED TRUST FULLY FOCUSSED AND DEDICATED TO INVESTING IN EARLY LEARNING REAL ESTATE WENDY MACAFEE Senior Development Manager Joined Folkestone in September 2014. Wendy is a registered architect. Previously held key development and fund positions at Cbus, Becton and Telstra Super. CARLA STEVENS Asset Manager Asset Manager of FET since 2011. Carla s experience is in valuations, property and project management. Previously with Hay Property Consultants. LACHLAN ATKINS Asset Manager Joined Folkestone in October 2014. Lachlan is a qualified property valuer with broad experience in specialised asset classes, most recently with Ernst & Young. FET Asset Tour Metropolitan Melbourne April 2016 24
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RESPONSIBLE ENTITY AND PRINCIPAL PLACE OF BUSINESS OF THE TRUST Folkestone Investment Management Limited Level 14, 357 Collins Street Melbourne VIC 3000 DIRECTORS OF THE RESPONSIBLE ENTITY Grant Bartley Hodgetts (Chairman) Victor David Cottren Michael Francis Johnstone Nicholas James Anagnostou SOLICITORS Clayton Utz Level 15, 1 Bligh Street Sydney NSW 2000 UNIT REGISTRY Boardroom Pty Limited Level 12, Grosvenor Place 225 George Street Sydney NSW 2000 T: 1300 737 760 AUDITORS/TAXATION ADVISORS PricewaterhouseCoopers Freshwater Place 2 Southbank Boulevard Southbank VIC 3000 BANK National Australia Bank Limited 500 Bourke Street Melbourne VIC 3000 Australia & New Zealand Banking Group Limited Level 29, 100 Queen Street Melbourne VIC 3000 CUSTODIAN The Trust Company (Australia) Limited Level 15, 20 Bond Street Sydney NSW 2000 SECRETARY Scott Martin Level 14, 357 Collins Street Melbourne VIC 3000 INVESTOR RELATIONS Lula Liossi Level 14, 357 Collins Street Melbourne VIC 3000 T: +61 3 9046 9946 27 FET Asset Tour Metropolitan Melbourne - April 2016