Funds & Trusts

strategic points

• Fund expiry – the Fund's term expires in 2082 with a liquidity event due in December 2012. 360 Capital is in the process of reviewing various options to deliver on the Constitutional obligation to provide liquidity for Unitholders in December 2012. Whilst no final decision has been made regarding the most appropriate mechanism, 360 Capital believes that Unitholder value would be unduly negatively impacted by an accelerated asset sale program that sort to dispose of all Fund properties by December 2012. We will continue to keep Unitholders fully informed in relation to any proposed liquidity strategy.
• Finance facilities – at 31 December 2011 the Fund was compliant with all loan covenants. In late March 2012, the Fund signed a new three year finance facility with NAB for its entire borrowings of $162.5 million.
• Forecast FY2012 distribution – distributions recommenced in the June 2011 quarter at 1.0 cent per Unit. 360 Capital is investigating options to provide Unitholders with further improvements in distributions which are currently forecast at 4.0cpu for FY2012 (barring unforeseen circumstances).
• Property – New leases concluded for the Half Year ending 31 December 2011 totalled 53,019sqm. In addition, by 15 March 2012 heads of agreement had been signed for a further 32,054sqm. Leasing activity across the Fund has been strong with terms agreed for a combined total of 84,953sqm over 11 transactions which equates to over 20% of portfolio NLA.
• Disposals - Numerous properties were marketed for sale during the Half Year ending 31 December 2011 in line with the Fund’s strategy to reduce gearing, reduce future income risk and improve portfolio asset quality by divesting the smaller assets of the Fund. Due to market conditions, only 38 Vinnicombe drive, Canning Vale reached settlement for the book value of $6.4m whilst one other asset is in due diligence with a contract issued.
• Development Land - In 2008, the Fund entered into a Development Agreement with Becton Development to develop land surrounding the existing buildings at 102-108 Bridge Road, Keysborough, Victoria. The final building, Building 9, reached practical completion on 16 November 2011 and consists of a 3,060sqm warehouse and 128sqm of office. With the property leased to Wallara Australia for seven years from 1 January 2012, the final payment of $1.7m to Becton under the development agreement was made.
• Capital expenditure - Capital expenditure committed or spent during the first half of FY2012 was for re-leasing or upgrade works to secure tenants at 60 Marple Avenue, Villawood and 14 Dansu Court Hallam. The expenditure at Villawood of $0.8m related to upgrades of the hardstand and office accommodation whilst expenditure at Hallam of $0.9m was to install sprinklers to the facility. Both major works add value to the properties by way of securing income and long term improvements to the buildings. Capital expenditure required for 223 Barry Rd Campbellfield is currently being determined depending on the outcome of the leasing or sale campaign. A makegood settlement from the tenant of $0.5m will assist with any works required. Seven other capital expenditure items greater than $200,000 relate to building upgrades and maintenance totalling $3.1 million.

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