St Hilliers Funds Management has sold an investment property at 25-37 Huntingdale Road, Burwood to a Queensland based funds manager.

The property, which is held in the St Hilliers Enhanced Property Fund No.1, has been sold for
$15.5 million and settlement is scheduled for January 2008.

The 2.5 hectare industrial property is approximately 13 kms east of the Melbourne CBD and incorporates an office/warehouse/distribution facility of 15,451 square metres, which is fully let.
St Hilliers recently obtained planning approval for the development of a 6,000 square metre warehouse at the rear of the site improving utilisation of the overall site area and enhancing the value of the asset.  

St Hilliers Funds Management General Manager, Nicholas Ridgwell said the sale of the Huntingdale Road property demonstrates St Hilliers ability to deliver superior returns from property activities.

"St Hilliers enhanced property funds are designed to deliver strong returns with a blend of investment and development returns. This sale, and the impending sale of the remaining asset in Fund No.1, is forecast to deliver a pre-tax return on equity, at a property level, in excess of 20% per annum across the portfolio," he said.

St Hilliers Enhanced Property Fund No.1 closed in December 2004 and has managed property investments in Sydney, Melbourne and Canberra valued in excess of $63 million.

The Fund, a risk-adjusted closed-end vehicle, has targeted an internal rate of return of 15 percent per annum on drawn equity, before tax and net of all fees and Fund expenses. St Hilliers is confident the final return to investors will be made two years ahead of the programmed six year life span of the Fund and that investors will take the opportunity to reinvest in the company's on-going funds management activities.

The Fund strategy involved investment in tenanted properties to provide an immediate income stream while St Hilliers applied its expertise to maximise the investment value of the property.

Five assets were purchased for the fund, of which four including the Huntingdale Road property have been sold. St Hilliers has obtained planning approval for a 250 unit residential development on the remaining property, also in Melbourne, at 119 Wells Street, Southbank.

St Hilliers recently closed the third in its series of unlisted property investment vehicles raising $50 million of equity from the wholesale investor market. Approximately half the equity was allocated in the initial fund portfolio, which comprises a commercial office building in Melbourne CBD and two industrial assets in South and South West Sydney.

The Melbourne property at 460 Bourke Street is undergoing refurbishment and will be offered for leasing in early 2008. Both industrial assets are fully let and income producing with sales proposed in the short/medium terms. A further two to three properties are required to complete the Fund's investment program and allocate the committed equity.