Investing in Milton Office Trust | Trilogy Funds Australia

Invest in Milton Office Trust

The Milton Office Trust (Trust), is designed to provide investors with consistent income, potential for long-term capital growth, and an opportunity to diversify investment portfolios.

This unlisted property trust has been established to acquire a modern six-storey commercial office building at 16 Marie Street, Milton, a near-city suburb approximately 2km from the Brisbane CBD. The property’s income is derived from a diversified list of tenants providing quality covenants.

^ Forecast distribution rate (net of fees, costs and taxes) for the period from property settlement (anticipated to be 7 December 2018) to 30 June 2020. Forecast returns are not guaranteed and are subject to the assumptions set out in detail in the product disclosure statement dated 24 September 2018.

Product Disclosure Statement

Before making an investment decision, always read and understand the PDS and all other relevant or updated information regarding the Trust.

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Offer summary

Minimum investment$20,000
Offer opens24 September 2018
Minimum subscription closing date29 November 2018 (Or extended to such later date as Trilogy determines at its discretion)
Settlement Date7 December 2018 (This is the anticipated date, but it may change as Trilogy determines)
Final offer closing dateAs soon as the maximum subscription is reached
Maximum subscription$15,555,000
Minimum subscription$14,280,000. The offer is conditional upon the minimum subscription being raised by 29 November 2018 or such later date as Trilogy determines.
Unit price$1.00 per Unit
Expected distribution ratePaid monthly in arrears, normally on the eighth business day following the end of each calendar month. Distributions are forecast to be 7.50% p.a. (net of fees and assuming the maximum subscription is raised). This is limited only to the period from the Settlement Date to 30 June 2019 and for the year that follows until 30 June 2020.
Investment structureSingle asset, closed-end, unlisted registered property trust.
TermThe expected initial term is 6 years from Settlement Date with the possibility of extension to no more than 10 years.
GearingMinimum subscription LVR 55% - Maximum subscription LVR 50%
RedemptionsThe Trust is an illiquid scheme. No withdrawals are allowed during the term of the Trust.
Fees & other costsSee the PDS for details

Make an informed decision

We believe everyone should be equipped with the right knowledge when it comes to making an investment decision.

All investments in unlisted property trusts carry risk. As the Trust invests in property it carries the market, property, and leasing risks associated with investing in property, particularly commercial office property. Additionally, there are risks relating to the structure of the Trust and the offer under the Product Disclosure Statement(PDS). As a geared investment, the Trust carries associated financial and leverage risks. Risks can have an impact on distributions and capital returns over the term of the Trust. Before making an investment decision it is important that you read the PDS, understand the risks of investing, and seek personal financial advice based on your own situation, circumstances, and needs from a licensed financial adviser.

This webpage has been prepared by Trilogy Funds Management Limited as responsible entity of the Milton Office Trust ARSN 628 273 807. Trilogy has issued a Product Disclosure Statement for the Trust dated 24 September 2018. Applications will only be accepted on the current application form that accompanies the PDS. Investment in the Trust is subject to terms and conditions, and risks which are disclosed in the PDS. These risks include the risk of losing income or principal invested. The Trust is not a bank deposit and Trilogy does not guarantee its performance. Trilogy provides only general financial product advice on its own products and does not consider your objectives, financial situation, or needs in providing such advice.

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Investment Status open
Unit Price $1.00
Forecast distribution rate 7.50%PA

Asset summary

Address16 Marie Street, Milton, Queensland
Purchase price$25.5 million
Independent valuation$25.5 million (as at 10 August 2018)
WALE3.86 years (by income as at 10 August 2018)
ConnectivityExcellent accessibility to major roads, bike paths, and public transport including bus, ferry and train.
Net lettable area3,902 square metres
Site area1,207 square metres
Occupancy89.3% occupied. The unoccupied space is supported by a vendor rental guarantee for a two year period from settlement.
Car parking33 on-site parking bays
Milton Office Trust Aerial View
Milton Office Trust Exterior
Milton Office Trust Interior
Milton Office Trust Location

About the Brisbane commercial market

According to many market commentators, the Queensland economy is in the midst of a strong recovery. This is further supported by a number of investments outlined in the latest Queensland Budget (2018-19) which demonstrates a significant investment in key areas for Brisbane, in particular [1].

Queensland economic growth is consistent with that of the greater nation at almost 3% per annum. Unemployment is slightly higher than the national average. At the end of the December quarter 2017, the State was reported as home to 4.96 million people [2]. This represents an increase of 1.7% on the previous year, above the national average. Many commentators are saying that the Queensland economy is benefiting from those in flight from property prices in the southern states relative to those in the State.

Key economic performance indicators for Queensland are positive:

PeriodAustraliaQueensland
Economic growth (YoY %)March 20183.1%2.9%
CPI (YoY %)December 20171.9%1.7%
Retail turnover (YoY %)May 20182.8%1.4%
Unemployment rate (%)March 20185.4%6.0%
Population (% pa)December 20171.6%1.7%
Official cash rate (% pa)September 20181.5%N/A

In 2017, over 27,000 square metres of near-city commercial office space was withdrawn from the market, either permanently, for
change of use, or for refurbishment [3]. There are only two new commercial office properties to provide additional supply to
the inner-city suburban market in 2018. The larger of the two developments has already been 100% pre-committed by Aurion
(some space available for sub-lease) and the second is 43% precommitted to Aurecon. Knight Frank reports that many projects
being proposed however, will not move to construction.

Vacancy in Milton has been largely spread across three properties. Two of these properties, in particular, became vacant after Origin Energy consolidated premises into a single location in the CBD. The July Property Council of Australia (PCA) vacancy statistics take this large vacancy in these two buildings into account. The property with this large and statistically distorting vacancy has now been leased by several major occupiers and is now 100% occupied. Two of the three tenants accounting for approximately 8,500 square metres of space are new to Milton, having vacated other near-city locations. We are advised that this reduces the overall Milton vacancy by approximately 4% and it follows that this should therefore reflect in a more favourable statistic in the January 2019 PCA figures. It also provides confirmation that Milton continues to appeal to major users for its amenity, access to public transport and cost effectiveness. Other B Grade buildings have, over the past nine months experienced improved leasing activity.

Other vacancy is also showing positive signs for improvement in the midst of much-needed upgrades and re-positioning of a
number of office buildings to a higher standard. As tenants are looking to upgrade their premises, consistently seeking higher
quality accommodation, A-grade office vacancy is below secondary space. Savills reports that the vacancy for inner-city suburbs,
grouped as a whole, is below that of the CBD at 14.5% [4]. Leasing activity is dominated by Government and community tenants,
followed by mining, and IT and communications related industries.

Interest in commercial office property remains strong from foreign investors, and domestic funds and trusts. Increased investor interest in 2017 delivered record transaction levels for the year.

[1] Queensland Budget 2018-19 Regional Action Plan
[2] http://www.qgso.qld.gov.au/products/reports/pop-growth-qld/qld-pop-counter.php
[3] Knight Frank Brisbane Fringe Office Market Overview May 2018
[4] Savills Research Briefing Brisbane Fringe Office August 2018

Important Information

Please visit this page for important updates on the Trust as they become available.

Brochure

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Product Disclosure Statement (PDS)

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Application form

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