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FKP COMMERCIAL PROPERTY TRUST NO.1
ARSN 102 513 593
half yearly report
For the six months ended 31 December 2006
FKP COMMERCIAL PROPERTY TRUST NO.1 HALF YEARLY REPORT 2006
01 02
financial manager’s
highlights report
• Distribution of On behalf of the FKP Commercial space needs of tenants by Committee remains in place
$1.95 million Property Trust No.1 (the Trust) providing additional office area to consisting of two independent
Management and the Directors of facilitate expansion, or a members and a representative of
(5.64 cents per unit), FKP Funds Management Limited, reduction in office space to allow FKP Funds Management Limited.
which equates to an I am pleased to report another for business consolidation.
During the 6 months, the
annualised distribution solid financial result for the six
This is demonstrated by the new Trust management team was
months to 31 December 2006.
yield of 11.3% 5 year lease to Napier and Blakeley further strengthened with the
on the original The income distribution for the over Level 7 which included a appointment of Joe Cama as
period was 5.64 cents per unit, surrender of their lease on Level Manager, Fund Operations. Joe
equity invested
which equates to an annualised 12, allowing Management to has 20 years experience in real
• Net profit of distribution of 11.3% on the structure a new 5 year lease with estate funds management. The
original equity invested. The Urbis JHD who required additional leasing and asset management
$1.95 million
income distribution is in line with accommodation. Furthermore, the function for the property
(2005: $1.93 million) Management forecast and is new 6 year lease for FKP Limited continues to be undertaken by
higher than the corresponding over Levels 4, 5 and 6 was made Scott Armstrong, Head of
• Net tangible assets period last year. Asset Management.
possible by negotiating a surrender
per unit of $1.50 of lease from PKF Chartered
The William Buck Centre Moving forward, Management is
Accountants over Level 6 who focused on the additional 7,470m2
• The ratio of remained 100% leased as at the
close of the reporting period vacated to alternative premises. expiring over the next 3 years. As
borrowings to total
– 31 December 2006. The recent transactions have lifted reported previously, these expiries
assets was 36.2% are anticipated to occur in a period
During the 6 months, Management the weighted average lease
of relative strength in the Brisbane
• 120 Edward Street was successful in mitigating duration for the property from
3.0 years as at 30 June 2006 to office market.
was 100% leased, significant lease expiry risk and
expanding the platform for future 3.7 years as at 31 December 2006. The trust is due to terminate
with 17 tenants and In addition to strengthening the
growth in distributions and capital prior to December 2008 and
an average lease value. Approximately 30% of the lease expiry profile of the asset, the Management remains highly
duration, by gross total building area was re-leased new rental levels that have been committed to ensuring that future
income, of 3.7 years. or renewed over the period. Key negotiated reflect an average 22% investment returns are maximised
lease renewals include: Subway, increase over the previous level. in the period ahead.
Napier & Blakeley, Urbis JHD and
The FKP Funds Management
FKP Limited.
Limited Board of Directors has
The lease renewals were largely remained unchanged this half year
completed prior to the scheduled except for the appointment of ADAM LEARMONTH
expiry dates and were structured Susan Stewart as Company Executive General Manager
to accommodate the changing Secretary. The Compliance FKP Funds Management Limited
FKP COMMERCIAL PROPERTY TRUST NO.1 HALF YEARLY REPORT 2006
The William Buck Centre
remained 100% leased
throughout the period.
The weighted average lease
term (by gross income)
of the building is 3.7 years
03 at 31 December 2006.
A schedule of key tenancies
property is shown below.
update
No. of Tenants Leased Space Avg Tenancy Area Avg Initial Lease Term Avg Lease Duration
17 100% 914m2 7.25 years 3.7 years
Tenant Name Leased Area (m2) % of NLA Lease Expiry Rent Reviews P.A. Options
Sunwater 3,510 22.6 Mar 2009 Fixed 3.5% 1*4 years
Dibbs Abbott Stillman 1,882 12.1 Dec 2011 Fixed 4%, market in 2006 1*5 years
FKP Limited 2,820 18.2 Sep 2011 Fixed 4.5% 1*5 years
William Buck Chartered Accountants 1,934 12.5 Oct 2009 CPI min, 3% max to 2005, 1*2 years
market in 2006, CPI min,
2% max remainder
Napier & Blakeley 967 6.2 Oct 2011 Fixed 4.5% None
Savills (QLD) Pty Ltd 1,067 6.9 Oct 2008 Fixed 4.0% None
Kings Parking Pty Ltd 91 spaces N/A Oct 2011 Fixed 3.5% None
2007
Lease Expiry by Area By Area as at Dec 2005
By Area as at Dec 2006
2008
The William Buck Centre’s
lease expiry profile as at 2009
December 2005 is compared
with the current profile. The 2010
graph highlights the removal 2011
of lease expiry risk for the
2007 and 2008 calender years. 2012
2013
0 10 20 30 40 50
Percentage of Building Area
FKP COMMERCIAL PROPERTY TRUST NO.1 HALF YEARLY REPORT 2006
There are a number of
development sites that can
accommodate large office towers
in the Brisbane CBD. These
projects are currently seeking
tenant pre-commitment and
include 400 George St (40,000m2)
and 37 Tank St (30,000m2). The
04 estimated date for completion of
these larger projects is in the
05
market 2009 and 2010 calendar years. investor
update Recent sales activity such as communication
545 Queen St, 102 Adelaide St
and 316 Adelaide St have all
The Brisbane CBD office market shown yields well below 7.0%. FKP Funds Management is published reports, from the FKP
continues to show strength in These yields are being justified by committed to providing investors Property Group website.
leasing demand and investment investors who are anticipating
with regular updates on their
sales activity. The driving forces positive rental reversions from the Simply go to www.fkp.com.au
investment in the Trust.
behind this continued performance re-letting or refurbishment of and click on the following links:
office properties. Total return Investors will receive the
include Queensland’s above • Core FKP Divisions/
benchmarks for investors continue following documentation:
average population growth, white
collar employment growth, to firm, driven by the large flow of • Funds & Asset Management/
• Annual Reports for the years
demand for resources and domestic and international • FKP Commercial Property
ending 30 June for each year
ongoing capital investment toward investment funds seeking assets. Trust No. 1
of the Trust, and Half-yearly
major infrastructure projects. The outlook for the office leasing Reports for each six-month If you have any administrative
Demand for office space or net and investment market over the period ending 31 December queries on matters such as
absorption has averaged around next two years remains robust,
address changes or how your
54,000m2 p.a. over the past underpinned by a strong local • Six-monthly distribution
and national economy, positive distributions are paid, please
2 years with average take up over statements
business sentiment and contact the unit registry
the last 5 years being around
33,000m2 p.a. This sustained continued growth in the white Investors can also access on 02 8280 7916 (NSW),
period of office take up has driven collar sector. The rate of rental information on their investments, or 1300 133814 (other states).
the overall CBD office vacancy rate growth is expected to temper including distributions and
down to 2.3%, making Brisbane during 2009 and 2010 as the first
one of the tightest leasing markets major additions to new supply
in the country. The shortage of reach the market.
office space continues to facilitate Management continues to
both face and effective rental
growth across all grades of
actively manage the property in 06 Period ended Period ended
commercial property.
light of current and expected financial summary 31 December 2006 31 December 2005
market conditions. Part of this
This rental growth has enabled process includes gaining a clear Total assets ($’000) 85,170 68,264
confidence to return to the office understanding of each tenant’s
development market with a office space needs and tailoring Total liabilities ($’000) 33,453 33,206
number of projects now either accommodation solutions which Net assets ($’000) 51,717 35,058
underway or likely to commence maximise opportunities for
tenant retention and enhance Net tangible asset backing ($ per unit) 1.50 1.01
construction to relieve the
current supply shortages. These the investment performance of Total income ($’000) 4,296 3,899
projects include mainly smaller the asset.
Total units (’000) 34,500 34,500
developments which are Source: Statistics and data has been
substantially pre-leased such as Distribution to unitholders (cents per unit) 5.64 5.48
sourced from Property Council of
the Piccadilly Centre at 299 Australia, Colliers International, Annualised distribution yield (%) 11.28 10.96
Adelaide St (8,966m2), QIC’s CB Richard Ellis and Savills.
140 Elizabeth St (10,000m2) and
Central Plaza III (11,000m2).
FKP COMMERCIAL PROPERTY TRUST NO.1
06
corporate
directory
Responsible Entity and Auditors
Principal Place of Business PKF
FKP Funds Chartered Accountants
Management Limited Level 6, 10 Eagle Street
(Australian Financial Services Brisbane QLD 4000
Licence No. 222273)
Level 5, 10 Quay Street Unit Registry
Sydney NSW 2000 Link Market Services Limited
Level 12, 680 George Street
Registered Office of the Sydney NSW 2000
Responsible Entity
Level 5, 120 Edward Street Custodian
Brisbane QLD 4000 JP Morgan Trust
Australia Limited
Directors of the Level 4, 35 Clarence Street
Responsible Entity Sydney NSW 2000
Ben Macdonald (Chairman)
David Crombie (Deputy Country of Incorporation
Chairman) Australia
Peter Brown
Rodney Forrester
Philip Parker
Leonard McKinnon
Lee Seng Huang
