MPG has grown the value of its regional cities property trust to more than $100 million after acquiring five government buildings in NSW, Victoria and Queensland.
The Melbourne-based fund manager paid $41 million in total for the properties on a blended yield of 7.9 per cent.
The open-ended fund now comprises 13 regional assets valued at $103.8 million with a weighted average lease expiry of five years. It is forecast to deliver a 7 per cent initial annual return to investors.
A spokeswoman said MPG was seeking to raise a further $15 million from wholesale and retail investors for the fund which it established in 2018 to invest in government and social infrastructure properties in growing East Coast regional hubs.
The latest deals include the Centrelink/Department of Youth Justice building in Logan Central, acquired for $14.13 million, the Department of Communities’ Child Safety Services building in Ipswich bought for $8.85 million and the National Disability Insurance Scheme/Department of Housing building in Toowoomba acquired for $7.4 million. Two Centrelinks in Morwell and Moree were bought for $6.5 million and $4.1 million respectively.
“With over 88 per cent 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.” said MPG director Brett Gorman.
“All the properties have been carefully selected in growing regional locations for their defensive income streams and potential for capital growth.
In addition, he said the properties were located in areas targeted for infrastructure improvements and population growth.
“The trust’s properties have proven to be a good defensive asset class in the current COVID-19 environment and are never more relevant than now with major tenant Centrelink responsible for the provision of JobSeeker and JobKeeper payments as well as other essential services.” said Mr Gorman
Marc Leiba of Leiba Commercial, Philip O’Dwyer of Colliers International, Jack Morrison of Savills Australia and Xavier Rahme of CBRE were the agents that negotiated the five deals.
MPG evolved out of property developer the McMullin Group, established by the late Spotless founder, Ian McMullin. It has more than $750 million of funds under management.
Mr Gorman said MPG would continue to grow the portfolio by targeting government-tenanted commercial properties valued up to $20 million in growing regional locations.
These assets, he said, were often overlooked by the larger institutional investors and were are out of reach of most individual property investors.