Listed real estate fund manager Folkestone has launched a property development offering beginning with an 80 per cent investment in a site approved for residential subdivision in the Melbourne suburb of Wollert.
The Folkestone Wollert Development Fund aims to develop 560 residential plots on the 42.2 hectare property known as Amber on Wollert.
The development will proceed in conjunction with ID-Land, which owns 20 per cent of the project.
Wollert is 25 kilometres north of Melbourne’s central business district, positioned between the suburbs of Craigieburn and Mernda.
The development site was originally acquired in 2015 in a 50 per cent joint venture between Folkestone and ID-Land.
The fund has secured 115 pre-sales or 20.5 per cent of the total number of lots in the development.
The joint venture partners will now be selling down their respected share of the development, leaving the new fund with an 80 per cent share in the project and ID-Land a 20 per cent share. A 20 per cent interest in the project will continue to be held by Folkestone via a 25 per cent investment in the Wollert Development Fund.
The offering has an expected internal rate of return of 17 per cent and a forecast 56 per cent return on equity. The fund is aiming to raise $19.05 million in external capital with an additional $6.35 million investment from Folkestone.
“The securing of the land in Wollert, in joint venture with ID-Land, prior to rezoning and then selling down to a Folkestone managed fund once rezoning has been achieved, is consistent with our strategy to use our balance sheet to secure attractive investment opportunities for our funds management platform,” Folkestone managing director Greg Paramor said about the new development fund.
“We expect strong interest in the fund’s capital raising from our investor base given the attractive forecast returns, the strong pre-sales we have achieved to date and its location in one of Australia’s fastest-growing areas.