Australia / Brisbane
Mar 02 2018Add to Favorites
The recent sale of the Chinatown carpark by a Trust managed by Sydney based property group Ashe Morgan in Brisbane’s Fortitude Valley for $64 million, ended an energetic 2017 for the group in Queensland which also saw the group purchase the Health and Forestry buildings in the Brisbane CBD for $66million.
Ashe Morgan acquired the carpark as part of the Valley Heart Portfolio in 2015, along with the 14,000sq m T.C. Beirne building for $79 million.
At the time, the two assets were physically and legally connected by an aerial pedestrian bridge which meant that the portfolio contained a range of retail, commercial and carpark uses. This, combined with the level of vacancy (around 11,000sqm of tired commercial space) and the capex required, meant the property was able to be acquired on a very compelling basis.
Ashe Morgan removed the pedestrian air bridge allowing the properties to exist as independent assets. The 450 bay carpark was upgraded and secure parking installed on a new 15 year lease.
Ashe Morgan still retain the T.C. Beirne building which is being progressively upgraded to continue to deliver strong ongoing investment income for the Trust. The ground floor retail of the T.C Beirne building is currently being refurbished by Hutchison builders to create a high quality, vibrant retail offering that supports the office tenants of the building and provides amenity for the local area and activates the central Valley precinct, streetscape and mall.
The current investment landscape in Australia is driven by a range of factors, not least the 2019 federal election, and the view is that the result of the Wentworth by-election, a seat that has historically been monopolised by the Liberal Party, will be the foreshadowing of the federal outcome. The Australian equities market is experiencing volatility, with a 200 point drop last week in the S&P ASX index, the largest drop this year and potentially the result of sentiment surrounding geopolitical headwinds with the latest developments relating to the trade war between the USA and China. Global bond rates remain low, and despite incremental increases, interest rates are too low to be attractive from an investment perspective.
In an ongoing low-interest rate environment on savings and with banks withdrawing from property and construction financing, investment groups like Centennial Property Group are seeing value in providing first mortgage funding for property development, recently settling a $48m loan for a mixed-use retail/residential development in Sans Souci, NSW
With the combined influences of a cooling residential property market and heightened bank scrutiny on all aspects of real estate lending, traditional debt sources are, in many cases, closed to developers and commercial real estate investors, particularly where circumstances require a specific funding solution.
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