Castlerock heads $30m capital raise to expand govt prop portfolio

Patrick Buncsi

20 March 2024

Castlerock, a Melbourne-headquartered fund manager specialising in the government-leased property sector, has announced it will head a more than $30 million capital raise to support large-scale property development projects for Australia’s state and Federal governments.

The capital raise comes as the firm seeks to further grow its Castlerock Government Property Fund, recently rebranded from ‘Auslink Property Trust No. 2’ – a property development and acquisition program supporting government-tenanted projects.

The $526 million Castlerock Government Property Fund currently comprises 13 state- and Commonwealth Government-leased assets spanning five Australian states.

As part of the Fund, Castlerock is currently completing a $60 million, five-level office building in the Melbourne suburb of Frankston to be leased by the Victorian State Government – recognised as a “significant addition to the Fund’s portfolio”.

The firm said it is also currently “looking for new opportunities” for the Fund.

“We are consistently exploring future opportunities for acquisitions or development of premium government-leased properties across Australia, with the aim of providing our investors healthy distributions and growth potential,” said Castlerock Director Adam Bronts.

He noted that past capital raisings for specific acquisitions and/or developments have “always been over-subscribed”.

According to Castlerock, its Government Property Fund boasts an average Weighted Average Lease Expiry (WALE) of 5.9 years, a 99 per cent occupancy and a loan-to-value ratio of 43 per cent (90 per cent of the debt is hedged). It has a forecast distribution of 7.78 per cent for the financial year to 30 June 2024.

Founded 21 years ago, the fund manager and full-service property group focuses on the acquisition, development, and management of property assets for government.

Castlerock boasts that it has successfully managed a diverse portfolio of more than 40 Government-leased properties Australia-wide.

The firm notes that Government-tenanted properties provide a “solid foundation for secure rental income”.