Investor appetite for regional assets continues with leading property funds manager, MPG Funds Management, today announcing the acquisition of four regional properties in VIC, NSW and QLD for $53.25 million on a blended yield of 6.25% in its regionally focused property trusts.
The deals comprise CityPoint Government Office in Townsville (QLD) secured for $26.0 million, Sarina Village Shopping Centre in Sarina (QLD) for $13.0 million, a Victorian Government building in Bendigo (VIC) for $7.55 million, and a Centrelink property located in Ballina (NSW) for $6.7 million.
The CityPoint property is a modern 5,047 sqm* (NLA) office building predominantly leased to Queensland State Government tenants including Queensland Police, Department of Housing and and Queensland Fire and Emergency Services. The deal was negotiated by Elliot O’Shea of Jones Lang La Salle.
Built in 2007, Sarina Village is an open format neighbourhood shopping centre anchored by a 2,754sqm Woolworths and 7 specialty shops, with a total GFA of 3,354sqm. The 10,190sqm site features parking for 189 cars and a weighted average lease expiry term of 5.8 years. The Sarina property was sold by Savills’ National Director, Peter Tyson, who commented “Sarina Village services the daily needs of the local community with over 75% of gross income secured by a strongly trading Woolworths supermarket and features a convenience-based tenancy mix including groceries, pharmacy, bottle shop and a Subway outlet.”
Mr Tyson observed “the key fundamentals of the resilient convenience-based retail centres underwritten by grocery, medical and other essential services continue proving popular with investors.”
The Bendigo property was sold through Travis Hurst of Colliers and the Ballina property was negotiated through Marc Leiba of Leiba Commercial.
MPG launched the MPG Regional Cities Property Trust in September 2018 with a strategy of targeting government and social infrastructure commercial properties located in growing regional hubs on the eastern seaboard of Australia. The new acquisitions bring the assets in the Trust to over $165 million and MPG is seeking to raise a further $15 million from wholesale and retail investors for the open-ended fund, which is forecast to deliver a 7% annual return.
MPG’s director, Brett Gorman pointed out “the Trust’s essential-service properties have proven to be indispensable during the COVID-19 pandemic, with the trend of a decentralised work-from-home environment allowing many to flock to regional centres and enjoy a great lifestyle with lower cost of living benefits”.
“With over 88% of the Trust’s current income secured by government tenants and the attractive tax-advantaged cash yield compared to current cash rates on offer, the Trust has been particularly well received by investors and financial advisers.” added Mr. Gorman.
“The properties have been carefully selected for their defensive income streams and potential for capital gain, while targeting locations that promise strong infrastructure and population growth”.
Mr. Gorman also revealed “MPG will continue to grow 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 are out of reach of most individual property investors”.