About This Investment
In October 2020, Stronghold established the Stronghold Industrial Property Trust No 16. The Trust was established to complete the acquisition of 21 – 31 Markwell Place in Townsville, which was purchased for $6,200,000.
The Manager sort to capitalise on the increasing demand for warehouse and logistics assets nationally and was attracted to the strength of the tenant covenant (3.75 yrs remaining to Queensland Government), the specialised fit out, overall building quality and its ability to accommodate alternative users by virtue of the flexible building layout, if required.
The primary investment strategy was to extend the existing tenancy agreement with the Queensland Government prior to the divestment of the asset in year 5.
11.35%p.a
7.81%p.a
Trust Highlights
- DATE OF PURCHASE:October 2020
- PURCHASE PRICE:$6,200,000
- DATE OF SALE:June 2023
- SALE PRICE:$7,500,000
- AVERAGE CASH YIELD:7.81% p.a
- INTERNAL RATE OF RETURN:11.35% p.a
However, the strategy was adjusted on notification that the tenant would vacate the premises at the end of the existing term.
In response to this advice, the Manager considered both a re-leasing or early divestment strategy. Ultimately, the decision was made to pursue an early divestment to take advantage of the historical strength of the industrial market at the time.
The property was successfully sold in June 2023, on an off-market basis, for a consideration of $7,500,000. The property was sold to an owner occupier, prior to the expiry of the Queensland Government lease.
Trust 16 was a successful and profitable investment for Unitholders, returning an average annual distribution of 7.81% throughout the investment term, and realising a solid internal rate of return (IRR) of approximately 11.35% on divestment.