TRUST STRUCTURE AND MANAGEMENT
Key Investor Information Key considerations regarding the operation of the Trust, which may assist Investors to assess the risk and returns of an investment, are summarised below. GEARING RATIO (LVR) The Trustee will monitor and manage the gearing ratio of the Trust on an ongoing basis. The drawn Loan to Value Ratio for the Trust as at Financial Close is anticipated to be approximately 50% with an approved limit of 55%. INTEREST COVER RATIO (ICR) ICR is the ability of the Trust to meet interest payments from earnings and is a key metric used by financiers. It is calculated by dividing the Net Operating Income before interest, by interest cost, and is a measure of the buffer against either interest expense increasing and/ or income decreasing. VALUATION POLICY The Trustee will undertake such valuations as it considers necessary to properly manage the Property on behalf of Investors. RELATED PARTY TRANSACTIONS The Trustee will enter into agreements with related parties on arm’s length terms. WITHDRAWAL RIGHTS An investment in the Trust should be viewed as an illiquid and medium-term investment.
Trust operation The Trust will generate income from the rent received from the Property which will be used to pay distributions to Investors on a monthly basis. Before distributions are made to Investors, the Trustee will use the rental income to pay for expenses such as interest on borrowings, management fees, property related expenses, capital expenditure and other future property related expenses. In addition, the Trustee may retain some of the Net Operating Income as a contingency for other expenses, such as projected increased interest payments on debt. Any capital growth in the investment will occur due to increases in the value of the Property. This may occur if net rental income increases and/or the capitalisation rate that purchasers are willing to pay for the Property improves, generally due to an uplift in market conditions. Who should invest in the trust The Trust is only on offer to wholesale or sophisticated investors who: 1. Are seeking exposure to the property market. 2. Have a medium-term investment outlook; 3. Do not need access to the funds invested within that time frame; and 4. Are seeking regular income payments via monthly distributions. Exit Strategy The Trust will be an unlisted, unregistered, illiquid managed investment scheme structured as a unit trust. The Property is a cash flow yielding investment and the Trust is being established to generate investment income. The Manager will regularly review prevailing conditions and will make recommendations as to any disposal program. The Manager and Trustee will regularly evaluate potential exit strategies for Investors (in part or in full) such as the sale of the Property, or other liquidity events/redemption opportunities.
QUANTA TENNYSON STREET OFFICE TRUST | Information Memorandum
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