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GM Property sells to Forza for $31.5million

Property Markets / Transactions

Australia

Jan 29 2018

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Perth based GM Property Group has sold a major Blackburn industrial asset to property investment group Forza Capital for $31.5 million on a passing yield of 6.6 per cent in the first significant industrial deal of the new year.

The strategically prudent divestment has seen GM realise a circa 80 per cent increase in value just over 2.5 years into a scheduled eight year investment.  

Located in proximity to the `Golden Mile’ the 15-33 Alfred Street property comprises 20,400 square metres of warehousing and ancillary office space on a 41,000 square metre site. 

Transacted off-market by CBRE Director Capital Markets, Rory Hilton, the property was sold fully leased to a number of tenants including a 50 per cent lease to Gainsborough Hardware.

GM purchased the asset for $17.5 million in April 2015 with a 50% vacancy, however recognising the potential as a quality infill property with strong underlying land value and functional, lettable improvements.

Director Blair Gerrard said the group had delivered on its strategy of acquiring well located property that is discounted by the broader market due to short term and rectifiable flaws.

``By providing lateral solutions and utilising our expertise we were able to re-lease, refurbish and reposition the asset,’’ Mr Gerrard said.

He said resolving loading issues and the completion of a minor refurbishment including greater warehouse leasing options, proved successful in the negotiation of new leases to Cool Drive and Lovisa, providing a fully let facility.

``The completion of the asset repositioning, coupled with the current strength of the investor market made a compelling case to divest the property, even though this was not our original strategy. 

``We are pleased we could deliver a very strong return to our investors in a much shorter time than originally anticipated.

``Our mandate is not to build funds under management for the sake of it. If an asset divestment makes compelling sense on merit, we will sell regardless of our initial investment strategy,“ Mr Gerrard said.

GM has built an industrial investment portfolio of 10 predominantly east coast assets since 2012 with a total value of circa $180 million, and while it has not been an active industrial  buyer over the last 18 months, Mr Gerrard said GM remained on the look-out for value opportunities across a broad range of asset classes and locations.

The Group’s most recent acquisitions have been development projects in Perth with the purchase of a prominent development site in Scarborough earmarked for a circa $28 million, 53 unit residential project, as well as multiple broad acre development sites that will be released over the next 2-5 years, collectively yielding more than 300 residential lots.

 

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