Australia / Brisbane
Mar 12 2018Add to Favorites
In November 2017, real estate investment manager and advisory group, Ashe Morgan, closed its capital raising for its recent purchase of the Health and Forestry buildings in Brisbane adding to the assets it now manages on behalf of its investors. The purchase was unusual in that the group chose to utilise only equity for the acquisition. Where traditional purchasers requiring bank debt for funding may have been hamstrung by the characteristics of the asset and the large amount of immediate vacancy, Ashe Morgan chose to eschew debt entirely in its strategy.
‘Our capital raising was oversubscribed significantly faster than we anticipated - in fact, we had over three times the allocation required from our investors and we believe that is a reflection of the quality of the asset and the fact that we acquired the asset with all equity, which meant there was no bank or debt risk,’ said Ashe Morgan Principal Mendy Moss.
‘The $66 million acquisition price for the portfolio is below replacement cost for the asset and we are confident of implementing a strong turnaround strategy for an asset which has been continuously occupied by the State Government for 34 years and is due for a major upgrade,’ he said.
‘We are fully aligned with our co-investors. Ashe Morgan invests in every deal that we do and we anticipate strong returns for this asset as a result of our active and rigorous management of the portfolio together with our robust repositioning strategy,’ said Moss.
The property is currently comprised of two 20 storey office towers, with around 26,000sqm of net lettable area, on a land holding of 3,449 sqm. The purchase of the property through an ‘off market’ transaction represented a rare opportunity to acquire a sizeable, existing commercial asset with significant refurbishment potential within the Brisbane CBD.
A development application was recently lodged for a transformation scheme developed by award-winning architects Fender Katsalides which envisages the two towers being connected, with additional floor added above to create a new modern 42,000 sqm A grade building, offering large floorplates of 1,800sqm, a new city laneway, skydeck, all new services and a modern facade.
As well as working closely with local leasing agents to understand the local supply-demand dynamics, Ashe Morgan has an elevated knowledge of the Brisbane commercial market from its current and previous investments in Brisbane [read the full Valley Heart editorial here "Ashe Morgan sell Fortitude Valley Heart car park for $64m" ].
The changing and competitive retail environment is driving transaction activity for shopping centres, as owners refine their portfolios, adjust their exposure to different states and asset types and seek greater diversification to improve their long-term risk-return profile.
More private investors will have access to individual, first mortgage secured loans, which produce a monthly income, via an online platform launched by Balmain Private.
For 2018, our investment decisions will continue to be driven by opportunities presenting strong property fundamentals and outstanding risk-adjusted returns, with a focus on primary capital cities across the Eastern seaboard.
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