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" ].
Residential developer Legacy Property is set to commence a syndicated equity raise for its 7th and final stage of Caddens Hill, with minimum investment amounts starting at $250,000, targeting 17.5% investment return over the twelve month construction period. Legacy Property has $3bn of projects completed and in progress consisting of c.3,600 dwellings . 14 projects have been completed with another 7 underway, gross completed project values range from $85m to $248million for each project.
Home loan approvals have fallen significantly off the back of the APRA and the Royal Commission initiatives together with new Responsible Lending Criteria. The ABS recently reported that home loan approvals have fallen by 13.6% year on year and within that, investment loans have come back by c.20%
Off the back of successfully settling a $48m syndicated first mortgage for a residential apartment development in Sans Souci just weeks ago, Sydney-based real estate investment manager Centennial Property Group (CPG) opened a new fund with a focus on the industrial and logistics market, Centennial Industrial and Logistics Fund II (CIL II). The fund, available only to wholesale and private high net worth investors, opened on 1 November and was seeking to raise c. $38 million. CPG closed the fund less than two weeks later, well before the official close date, due to oversubscription.
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