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" ].
Sophisticated investors are invited to invest into the Fund, with a minimum investment of $250,000 and forecasting a total return in excess of 12% p.a., including average cash distributions of 5.4% p.a. over the 4-year investment period. Stirling’s Directors will co-invest a minimum $1.0 million into the Fund.
To accommodate yield investors Quintessential Equity is set to launch a commercial property fund, which will shortly raise $150million from investors
Qualitas' first "pure property debt" listed investment trust, the Qualitas Real Estate Income has raised another $35 million in funds to issue more commercial loans.
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