ARK has purchased 43.85 hectares of land 20 kilometres south-west of Ingham in Far North Queensland for the purchase price of $396,000 (Teak Property No.12).

ARK drew down on its debt facility with NAB in order to complete the purchase of Teak Property No.12. The purchase was made therefore with 100% debt capital.

Simultaneous with its acquisition, ARK has leased out Teak Property No.12 for an initial term of 20 years. ARK expects to incur transaction costs of 4% as a result of acquiring Teak Property No.12. The starting rent therefore is $45,302 plus GST per annum. This equates to an income yield of 11%. The rent to be earned by ARK automatically rises by the greater of 2.8% or the consumer price index (CPI) for the 12 month period that has just passed. This rent increase occurs each year during this 20 year lease period.

Teak Property No.12 is comprised of a single lot and has a fence to fence area of 43.85Ha. Prior to making an offer for Teak Property No.12, ARK received a sworn valuation in respect of Teak Property No.12. The sworn valuation valued Teak Property No.12 at $400,000.

The sworn valuation of Teak Property No.12 made the following important points:

• Teak Property No.12 is currently used as a sugar cane farm.
• Teak Property No.12 is comprised of good quality agricultural land well suited to a variety of agricultural pursuits.
• Teak Property No.12 is located in an established and well regarded sugar producing locality.

Teak Property No.12 is located 20Km south-west of Ingham in Far North Queensland. Ingham is situated approximately 110km north of the city of Townsville.

Suitability for Teak Production

Teak Property No.12 is ideal for the growing of Teak (Tectona grandis) trees. Teak Property No.12 is thoroughly suitable for the growing of Teak for the following reasons:

• Teak grows in areas that receive between 1000 and 4000 millimetres of annual rainfall. Teak Property No.12 has reliable annual rainfall in excess of 1600mms, and has adequate soil depth, nutrient levels, drainage and site microclimate conditions.
• Teak Property No.12 is close enough (110Kms) to a major port (i.e. Port of Townsville). Well established road and rail infrastructure exists from Teak Property No.12 to the Port of Townsville.
• Teak Property No.12 has a normal risk exposure profile to natural catastrophe after assessing key indicators, which include historical exposure of the site to fire, wind, disease or drought.