May 20 2019Add to Favorites
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.
Some interesting transactions this week below.
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.
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.
British accommodation group InterContinental Hotels Group (IHG) will open its fifth "voco" hotel in Australia in Sydney's Chinatown with newcomer developer Linzhu Australia.
>>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).
MP Funds Management update 1st Oct 2019 and investment pipeline: MP Funds Management has completed its co-investment into the acquisition of a 52,000sqm office asset in Brisbane CBD, right opposite the railway and with 98% of rental income underpinned by government tenants.
MP Funds Management has provided investment funding for approximately $1.3b in unlisted real estate since 2013 and has provided an investment return of approximately 21% annually. Whilst MP Funds Management focuses on unlisted real estate, I am always fascinated by innovation and I personally will sometimes invest in other areas. Recently I caught up with the founder of a very clever new Australian – based app called Stake https://stake.com.auwhich is a Business-to-Consumer based platform that enables Aussies to get direct exposure to the USA equities market.
United States of America
In November 2014 we co-invested with another Manager into the acquisition of a 13-level North Sydney CBD office tower for a purchase price of $36.75m or $4,665 per sqm. A total of $19.5m equity was invested with a gearing ratio of 65%, debt was locked in at a rate of c.4% for the intended five-year investment period.
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