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MPFM Value-Hunting and Benchmarking wk 20 May 2019

Value Hunting / Markets

Australia

May 20 2019

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Monday this week for me has been back to back meetings with clients, investors, and catch-ups in Melbourne. It’s amazing the visceral improvement in sentiment since the results announcement of the weekend’s election.

We received a distribution on our 9 Hunter Street investment this week, contact me here for what listed property companies I have my eye on. Read more on 9 Hunter Street here.

Some interesting transactions this week below.

>>Hotel commentary:

The shortage of hotel rooms, particularly in Sydney, has encouraged a slew of hotel developments.

The latest update from hotel data analyst STR shows while the supply of hotel rooms in Melbourne has risen 4 percent in the year to April, demand has remained relatively unchanged while occupancy has dropped 3.7 percentage points to 77.5 percent.

Melbourne's revenue per available room (RevPAR) has also dropped 6 percent to $133.29. Both of Melbourne's occupancy and RevPAR numbers are the lowest for an average April month since 2013, likely caused by Easter holidays and Anzac Day occurring in the same week, STR says.

Hotels: 

Singaporean hospitality company Next Story Group has paid about $45 million for a newly built hotel in Melbourne's Southbank that will be the launching pad for a new hotel brand.

Quick facts:

  • >>Rooms: 162
  • >>Address: 167 City Road
  • >>Developers: Andrew Nehme and Dean Giannarelli
  • >>Hotel Brand: Next Story's first LinQ Hotel, an upper mid-scale hotel, when it opens in September.
  • >> Also opening: 120 room Sage Hotel in Ringwood & a NEXT Hotel in 80 Collins Melbourne CBD, developed by QIC and recently acquired by DEXUS for $1.5 billion.

British accommodation group InterContinental Hotels Group (IHG) will open its fifth "voco" hotel in Australia in Sydney's Chinatown with newcomer developer Linzhu Australia. 

Quick facts:

  • >> Rooms: 301 
  • >>End value $60.7 million
  • >>Use: 16 Storey mixed-use hotel with five levels of residential, two retail floors, one commercial floor with hanging garden & outdoor dining  
  • >>Address: 430 Pitt Street, Sydney CBD 
  • >> Site area: 1202 sqm
  • >>Hotel Brand: Voco 
  • >>IHG has 49 hotels operating under four brands in the Australasian region and has another 29 openings planned. 

Residential

Read MPFM's Macro Themes Driving Long Term Residential Fundamentals here.

>>Altis Property Partners, backed by superannuation fund investment mandate, last week announced the acquisition of 61 apartments out of a development of 130 in Sydney’s suburb of Epping. The acquisition represented a 32% discount value to book value and a purchase price of $32 million vs the reported book value of $52 million.

>>Capio recently also announced last week a capital raise of $50 million from high net worth families for brand new bulk discounted residential stock acquisitions. The group anticipates the fund will grow to c.$200 million.  

>>There are a reported >5000 brand new completed apartments on the market awaiting settlement or unsold, however, this is likely to be absorbed by the market based on the supply-demand fundamentals noted in the MPFM residential note here.

>>Strathfield sale: A two-bedroom house on 700 square meters at 6 West Street, Strathfield, NSW. Sold at auction for $2.4 million, $300,000 above what the Belle Property sales agent suggested is fair market value. 

>>Aqualand has announced a new development in Chatswood: "The Bertram" is a 5420-square-meter site amalgamated from eight houses and 12 townhouses located on Archer Street, Bertram Street and Albert Avenue, the site will yield 600 apartments and offer 10,000 square meters of commercial and retail space.

>>Chatswood has one of the most expensive house prices in Sydney with a median price of $2.3 million.

>> Significant government capital has been invested in the new metro and is going to change Sydney’s corridor, from North Sydney to Artarmon, and Chatswood creating high demand for homes along the metro line.

MPFM sees value in well located commercial office spaces across the eastern seaboard on Australia. MPFM’s 9 Hunter Street, Sydney co-investment is progressing in line with forecast and on course to deliver return double-digit returns. To read more on our 9 Hunter Street Sydney investment. Click here for the latest update

Mandi Prager is the principal of MP Funds Management. MP Funds Management has provided investment funding for over $1.1bn of real estate-based investments across 22 transactions and produced an average annualised investment return of 21-22% (IRR).

 

·     Want to invest with us? Register for Golden Goose Capital HERE

·     Subscribe to the MP Report HERE

·     Find out more about co-investing with MP Funds Management Here.

·     Visit MP Funds Management HERE.

 

 

 

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