ARK has purchased 101.6 hectares of land 22 kilometres due south of Innisfail in Far North Queensland for the purchase price of $1,000,000 (Teak Property No.5).

ARK drew down on its debt facility with NAB in order to complete the purchase of Teak Property No.5. The purchase was made therefore with 100% debt capital.

Simultaneous with its acquisition, ARK leased out Teak Property No.5 for an initial term of 20 years. The starting rent is $100,000 plus GST per annum. This equates to an income yield of 10%. The rent to be earned by ARK automatically rises by 2.8% per year during this 20 year lease period.

Teak Property No.5 is comprised of a single lot with a fence to fence area of 101.6 Ha. Prior to making an offer for Teak Property No.5, ARK received a sworn valuation in respect of Teak Property No.5

The sworn valuation of Teak Property No.5 made the following important points:

• Teak Property No.5 is currently used as a sugar cane farm.
• Teak Property No.5 is comprised of good quality agricultural land, well suited to a variety of agricultural pursuits.
• Teak Property No.5 is located in an established and well regarded sugar and banana producing locality.

Teak Property No.5 is located 22Km due south of Innisfail. Surrounding development is comprised of mainly sugar farms and rural residential homesites.

Suitability for Teak Production

Teak Property No.5 is ideal for the growing of Teak (Tectona grandis) trees. Teak Property No.5 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.5 has reliable annual rainfall in excess of 3000mms, and has adequate soil depth, nutrient levels, drainage and site microclimate conditions.
• Teak Property No.5 is close enough (260Kms) to a major port (i.e. Port of Townsville). Well established road and rail infrastructure exists from Teak Property No.5 to the Port of Townsville.
• Teak Property No.5 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).