The Forza Pelham Street Fund was an unlisted commercial office fund which held an office building comprising 5,905m² of Net Lettable Area (NLA) and 175 car parks on a land allotment of 3,772m². Located in the prime inner Melbourne suburb of Carlton, the Property was leased to 9 tenants with an average lease expiry of approximately 4.5 years. Government agencies accounted for over half of the NLA and many of the tenants had been at the property for a long period.
The Fund held the asset for its strong cash flow and prime location. In mid-2016, a tenant vacated their space which provided an outstanding opportunity to rejig tenancies, to claw back some NLA and extend sitting tenant leases by offering improved accommodation. Upon conclusion of this strategy and given the strength of the market for strong cashflow producing assets, a decision was taken to realise the asset which saw it sell for $37.05m to a local private investor.
The Fund delivered a total return of 135% on a low risk investment given the large land holding and quality cash flows.
Against the purchase price of $20.6m, the Fund delivered an outstanding result to investors, especially given the investment was producing annual distributions of approximately 9.25% per annum. Over an investment period of 4.5 years, the Fund delivered investors a total return of approximately 135% net of all fees (but pre tax).
