MPG Funds Management Limited have launched the $66.4 million MPG Regional Cities Property Trust (the Trust), offering investors the opportunity to access quality commercial properties sourced from the robust Australian regional markets.
Unitholders will initially invest in a portfolio of eight quality commercial properties located on the eastern seaboard of Australia. In addition, the Trust will hold an interest in the MPG Retail Brands Property Trust, a highly successful property fund previously launched by MPG which will be sold down when other suitable properties are identified.
MPG is seeking to raise a minimum of $25 million from investors, with the Trust’s properties being valued at $66.40 million upon completion. The Trust will be open-ended, with an initial forecast cash yield of 7.00% pa, which is also highly tax advantaged.
“MPG will also seek to expand the portfolio by targeting government tenanted commercial properties valued up to $20 million in growing regional locations, which we believe are often overlooked by the larger institutional investors and out of reach of most individual property investors,” said Brett Gorman, Director of MPG.
The Trust’s largest property is The Australian Pesticides and Veterinary Medicines Authority building, which is currently under construction and due to be completed in mid 2019. Located in Armidale, NSW, this 2,475m2 office building is secured by a fifteen year lease to APVMA and a ten year lease to the Department of Human Services, which are both Australian Government leases.
The Trust’s second largest property by net lettable area is the Environmental Protection Authority office building located in Traralgon, Victoria. This property is a 2,619m2 office building leased to the State Government of Victoria with approximately 6.7 years remaining on the lease.
The Trust’s other properties are:
- Centre for Non Violence, a 1,488m2 office/retail centre located in Bendigo (Vic), boasting the Centre for Non Violence, a not for profit government funded organisation as the major tenant
- United Children, a 713m2 childcare facility located in Grovedale (Vic), with 13.6 years remaining on the lease, and
- Four Centrelink properties ranging in size from 1,646 to 3,089 sqm which are located in Newcastle (NSW), Hervey Bay & Maryborough (QLD) and Echuca (VIC) and secured on 3.65 to 4.83 years to the Australian Government.
Finally, the Trust will hold an $8.33 million interest in the MPG Retail Brands Property Trust, which met forecast yields of 7.25% pa for the year ended 30 June 2018.
“All the properties have been carefully selected in growing regional locations for their defensive income streams and the potential for capital growth. They are new or near new and are located in areas targeted for infrastructure improvements and population growth,” said Mr Gorman.
“The attractive tax advantaged cash yield has been particularly well received by investors and financial advisers. We believe that investors will also be attracted to the high yield compared to current cash rates on offer and the calibre of quality government tenants secured on long term leases,” said Mr Gorman.
