St Hilliers has closed the second of its enhanced property funds having seeded the fund with two industrial properties with the possibility of including a third, currently under exclusive due diligence.

The two investment properties secured for the St Hilliers Enhanced Property Fund No.2 are located in Melbourne and Sydney and each has strong potential for enhancement.

St Hilliers property funds are unlisted property investment vehicles designed to deliver attractive returns to wholesale investors with a blend of investment and development returns. The Fund strategy is to invest in tenanted properties that provide an immediate income stream and then apply St Hilliers expertise to maximise the investment value of the property via refurbishment, redevelopment or repositioning in the marketplace.

St Hilliers Executive Chairman, Tim Casey said: "The successful closure of our second Fund reflects the increasing confidence of investors in our ability to manage the total process of providing high quality development products".

The Fund structure has built in corporate governance measures to ensure independence of decision making including an Investment Committee comprising two independent members, a requirement that committee decisions be unanimous, regular reporting on related party transactions and annual meetings of investors.

Independent members of the Fund Investment Committee include Messrs Mike McFarlane, (former Macquarie Bank Executive Director) and Peter Dransfield (former Australand Executive General Manager), with other members being Messrs Tim Casey and David Hurford, (Director, Specialised Capital Group, Westpac Institutional Bank).

The first asset acquired for the St Hilliers Enhanced Property Fund No.2 is an industrial property of approximately 7.9 hectares on the eastern side of Westall Road, Springvale, 22 kilometres south east of the Melbourne CBD.

St Hilliers purchased the property in October last year for $22.3 million. The property has a mixture of older style and modern commercial / warehouse buildings and has one hectare of land available for immediate development.

Contracts were recently exchanged on the second Fund property located in Bankstown and valued at $22.0 million.

The 5.46 hectare property is fully leased with 26,673 square metres of improvements.

"Both properties have the potential to generate higher returns through future development or repositioning. We have the added bonus of generating an income from the existing improvements on these site over a number of years while we plan their redevelopment," Mr Casey said.

St Hilliers will look to launch another in this series of enhanced property funds within the next few months.