QUANTA | Commercial Investment Opportunity

Forecast 5-year average distribution

8.65% Net P.A.

Year 1 Distribution

8.25% Net P.A.

Secure Income

QLD Gov/Fortune 500 tenants

WALE (by income)

4.70 Years

Future Upside

34% under rented

Occupancy

100%

Sector

Office

Purchase Price

$6.625M

Trust Term

7-Year Closed-Ended

The Quanta Tennyson Street Office Trust offers an attractive forecast 5-year average distribution of 8.65% net per annum, commencing at 8.25% net per annum, and increasing to 9.25% net per annum.

This investment offers a secure income stream, with 93% of income underpinned by high-quality government and Fortune 500 tenants. The property has a WALE of 4.70 years, ensuring consistent cash flow and stability.

Additionally, the property is under-rented, presenting immediate potential for income growth. Current leases are up to 34% below market rates, providing an opportunity to increase net income in Year 2 through re-leasing or renewal.

Constructed in 2008, this modern office building was recently enhanced with a $2 million custom fitout for the State Government, tailored to their long-term operational needs. Boasting a 5-star NABERS energy rating, it is ideally suited for government tenants (requiring a minimum 4.5-star rating) and large corporate occupiers. The building's recent construction and government upgrades offer investors the benefit of favourable part-tax deferred cashflows.

The purchase price reflects a 30% discount to replacement cost, highlighting the cost-efficiency of acquiring this property versus new construction. In Mackay, high construction costs constraining supply and limited competition of equivalent quality and amenity support ongoing rental growth, making this a compelling investment at below-replacement value. To construct the same premises today, an economic rent exceeding $550/sqm gross would need to be achieved.

The minimum investment amount for this opportunity is $50,000 for Wholesale investors. Applications for investment will open shortly!

Why Mackay?

Strategic Location

Mackay is located approximately 960 kilometres north of Brisbane and is Queensland’s fourth largest regional city being populated by 127,000 people. The region benefits from a diverse range of economic drivers including Agriculture, Mining and Resources, Health, Construction, Bio-futures, and Tourism.

Strong Economy

The largest employment sector in Mackay is Healthcare and Social Assistance which employs
8,324 people out of the 54,582-person strong workforce. With Mackay's growing population
and the increasing demand for healthcare services, this sector has seen consistent growth with the sector playing a crucial role in supporting the social fabric of the community by offering assistance and care to vulnerable populations.

Booming Resources Sector

The primary export from Mackay is Coking Coal which is essential to the production of steel and the spot price is currently sitting well above historic prices, the spot price as of Q1 2024 was $306/tonne which is approximately three times the price in Q1 2020 ($110/tonne).

Significant Investment

There are $45 billion of projects either proposed or underway within the Greater Whitsundays Region (Mackay, Isaac & Whitsundays). Within Mackay there are $1.5 billion in infrastructure projects, $1.8 billion in construction projects and $1.3 billion in utility projects currently underway.

Office Sector Overview

The national office market experienced a positive shift in Q2 2024, with notable improvements in demand and rental growth across major cities.

Total net absorption reached 51,900 sqm in the first half of the year, marking the best performance since H1 2022. National office vacancy rates decreased to 14.60% and rents have continued to grow with all CBD markets recording positive prime net effective rental increases.

Investment activity has surged with $2.87 billion in office assets sold, the highest quarterly result in 18 months. Prime yields softened slightly, reflecting the stable interest rate environment and improved buyer sentiment.

The Australian office market is showing signs of recovery from a cyclical low, with stabilising vacancy rates, growing rental demand, and increased investment activity.