Acquisitive real estate fund manager MPG has lifted the value of its regionally focused portfolio to over $700 million after buying the Bunnings Centre in Rockhampton from Charter Hall for $43.5 million.
The 18,319-square-metre large-format retail complex includes a 13,242-square-metre Bunnings warehouse and four additional tenancies at 540 Yaamba Road. It sold on a yield of 5.9 per cent.
Previously a Masters home-improvement store, the centre was converted to a Bunnings in 2017 and then sold to Charter Hall for $37.5 million.
MPG, which has acquired 14 properties in the past 18 months, many in regional hubs, bought the Bunnings on behalf of wholesale investors for a new single asset trust.
It is 94 per cent leased with an 8.5-year weighted average lease expiry. MPG expects to pay a 6.5 per cent distribution yield for the 2020 financial year.
MPG chairman Trevor Gorman said the MPG BW Rockhampton Trust closed two times oversubscribed. MPG will also launch a Regional Cities Property Trust this year that will soon hold $100 million of investments.
“With the Australian sharemarket at record highs and with RBA cash rates at historical lows, the income characteristics of property with cash returns in the vicinity of 6 to 8 per cent are looking very attractive to investors compared to most cash and fixed interest investments,” Mr Gorman wrote in a recent letter to MPG investors.
Peter Tyson and Jon Tyson from Savills negotiated the sale of the Rockhampton Bunnings.
MPG, which evolved out of property developer the McMullin Group, (established by the late Spotless founder Ian McMullin) has embraced the idea of “Big Australia” after launching a $66.4 million regional property fund in 2018. The fund owns commercial property in regional hubs such as Newcastle, Bendigo, Armidale and Maryborough.
The MPG Regional Cities Property Trust has a focus on government and social infrastructure properties located in fast-growing regional cities with a targeted distribution of 7.05 per cent by June 2020.
It comprises nine properties including the Environmental Protection Authority building in Traralgon, the National Disability and Insurance Scheme building in Toowoomba and five Centrelink branches in Echuca, Maryborough, Hervey Bay and Morwell.
The $15.9 million Australian Pesticides And Veterinary Medicines Authority (APVMA) building located in Armidale was expected to settle before Christmas and the $14.8 million Centrelink and Queensland government building in Logan City is expected to settle in the first quarter 2020.
*Article appeared in the Australian Financial Review 15 January 2020
By Larry Schlesinger