Trinity takes interest in CVC fund

CVC Limited has entered into a joint venture with Trinity to manage the Taragon Property Fund, creating a high risk and return vehicle. The fund managers plan to purchase a seed asset for the vehicle, a bulky goods development site in Belrose, Sydney, for $15 million.

The venture involves Trinity acquiring a 50% interest in CVC Property Managers Limited, the responsible entity for the listed Taragon Property Fund.

As part of the deal, the fund will be jointly managed by Trinity and CVC and renamed the CVC Trinity Property Fund.

Trinity and CVC have identified a 14,157 sqm retail bulky goods site in Belrose, Sydney, as a proposed seed project for the fund. The joint venture partners propose to purchase the development site located in the Austlink Business Park for a total consideration of $15 million.

The consideration for the acquisition will comprise $6 million cash, $7 million in new units in the Fund, at 16 cents per unit, and deferred contingent consideration of up to $2 million, depending on the success of the project.

The project is anticipated to have an end value of approximately $60 million.

The Belrose site is currently owned by a consortium in which CVC has a 45% interest and will retain approximately the same percentage interest in the property following the transaction.

CVC Property Managers Limited Chairman, Geoffrey Leaver, said the company will pursue a plan to grow the fund to more than $200 million over the medium term.

Trinity Chief Executive, Ben McCarthy, said that the CVC Trinity Property Fund will be the first external fund managed by Trinity.

"The fund will operate under a separate mandate than other Trinity managed funds and will typically invest in higher-risk and return investment and development opportunities and will hold the assets over a medium to long-term period," Mr McCarthy said.

Capital for the fund will be sought from investors in the New Year to acquire both the development site at Belrose and further investment opportunities for the fund in the first half of 2007.

Reprinted with permission. The Australian Property Review. http://www.apr.com.au