540
%
Total Return (Net of Equity Invested)
16.8
%
IRR (Weighted Average Net Internal Rate of Return)
*Figures based on original $1.00 units. Past performance is not a reliable indicator of future performance
Fund Mandate
Established in 2004, the Cottesloe Syndicate presented our clients with the opportunity to invest in a newly developed, purpose-built Medical Centre on Stirling Highway in Cottesloe.
The Syndicate’s primary goal was to provide investors with an ongoing passive income at a distribution target of 8.7% per annum over an initial 12-year term, with the possibility for extension subject to performance and investor interest.
Proactive Management
While the Centre benefitted from a strong anchor tenant in IPN – a subsidiary of global healthcare provider, Sonic Healthcare – our team identified several opportunities over the holding period to further enhance capital potential while supporting consistency of distributions.
These included diversifying the ground-floor tenancy mix to minimise risk and enhance income consistency, improving fit-outs to maximise foot traffic and increase Centre activation, and resetting leases to support an uplift in the Centre’s weighted average lease expiry (WALE).
The combination of these improvements, along with robust growth in WA’s medical sector, resulted in the decision to extend the Syndicate for an additional two terms due to strong performance.
Outcome
With the Syndicate approaching the end of its third term and all leases re-set, our team seized the opportunity in early 2023 to capitalise on the Centre’s success and deliver returns to investors through the asset’s sale, resulting in the following key outcomes:
Due to a strong response from prospective buyers, the Centre’s sale was secured in May 2023 for $11.8 million – 143% above its initial purchase price.
Investors received an average income distribution of 16% per annum across the life of the Syndicate.
Factoring in capital growth, investors realised a total return of 540% on their investment (excluding initial equity invested).
*Figures based on original $1.00 units. Past performance is not a reliable indicator of future performance
As a result of an initial $100,000 investment, investors realised $540,000 in distributions and capital gain over the 19-year period, exclusive of their initial investment.
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