ARK has purchased 20.44 hectares of land 20 kilometres west of Ingham in Far North Queensland for the purchase price of $185,000 (Teak Property No.15).

ARK drew down on its debt facility with NAB in order to complete the purchase of Teak Property No.15. The purchase was made therefore with 100% debt capital.

Simultaneous with its acquisition, ARK leased out Teak Property No.15 for an initial term of 20 years. ARK incurred transaction costs of approximately 4% as a result of acquiring Teak Property No.15. The rent being paid is $21,164 plus GST per annum. This equates to an income yield of 11%. The rent automatically rises each year 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.15 is comprised of a single title with a fence to fence area of 20.44Ha. Other pertinent points to note regarding Teak Property No.15 are:

• Teak Property No.15 is a sugar cane farm.
• Teak Property No.15 is comprised of good quality agricultural land well suited to a variety of agricultural pursuits.
• Teak Property No.15 is located in an established and well regarded sugar producing locality.

Location

Teak Property No.15 is located 20Km west of Ingham in Far North Queensland. Ingham is situated approximately 110km north of the city of Townsville. It is the administrative centre of the Hinchinbrook Shire Council. Ingham is situated on the Herbert River and has a district population of 13,000 people. All major services and amenities are available in Ingham.

Ingham is mainly known for sugar cane farming and the largest sugar mill in the southern hemisphere, Victoria sugar mill, which is owned by CSR Limited and is located close to the town. The main industries associated with Ingham are:

• Sugar Cane;
• Cattle;
• Timber;
• Fishing;
• Tourism; and
• Watermelons.

Suitability for Teak Production

Teak Property No.15 is ideal for the growing of Teak (Tectona grandis) trees. Teak Property No.15 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.15 has reliable annual rainfall in excess of 2000mms, and has adequate soil depth, nutrient levels, drainage and site microclimate conditions.

Teak Property No.15 is close enough (110Kms) to a major port (i.e. Port of Townsville). Well established road and rail infrastructure exists from Teak Property No.15 to the Port of Townsville.

Teak Property No.15 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.