The deals comprise the Centrelink in Wallsend in the western suburbs of Newcastle, acquired for $6.15 million, a Centrelink in Maryborough in Queensland’s Fraser Coast region bought for $4.075 million, and a Centrelink in Pialba, a suburb of Hervey Bay, acquired for $4 million.
Fund manager MPG has beefed up its regional property fund after acquiring three Centrelink buildings in NSW and Queensland for a combined $14.2 million on a blended yield of 7.3 per cent.
All three were offered for sale by a private, regionally based family. The Centrelink assets will deliver a return of more than 7 per cent.
MPG launched its $66.4 million regional property fund in September with a strategy of owning commercial property in regional hubs such as Newcastle, Bendigo, Armidale and Maryborough.
At the time it said it was seeking to raise a minimum of $25 million from retail investors for the open-ended fund, which is forecast to deliver a 7 per cent initial annual return.
“All the properties have been carefully selected in growing regional locations for their defensive income streams and potential for capital growth,” said MPG director Brett Gorman. “They are new or near new and are located in areas targeted for infrastructure improvements and population growth.”
The sale of the three Centrelink properties was negotiated by Marc Leiba and Jonathan Rosenthal of Leiba Commercial.
Mr Leiba said the average weighted lease expiry (WALE) across the portfolio was about four years.
When launching the fund, Mr Gorman said MPG would look 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”.
Its biggest asset is the new Australian Pesticides and Veterinary Medicines Authority building in Armidale, an agricultural centre in the NSW Northern Tablelands that member for New England and former deputy prime minister Barnaby Joyce described as the “centrepiece of decentralisation”.
The trust’s other properties include an Environmental Protection Authority office building located in Traralgon, Victoria, the NDIS building in Toowoomba, an office and retail building in Bendigo tenanted by the Centre for Non Violence, a not-for-profit government-funded organisation, a childcare centre in Grovedale, Victoria, and another Centrelink in Echuca, Victoria.
*Article appeared in the Australian Financial Review 6 August 2019
By Larry Schlesinger