Augusta Fund's Brisbane property offering
/ Augusta News
Augusta Funds Management has headed across the Tasman to offer a multi-tenanted commercial property in Brisbane, anchored by one of Australia's longest established early-childcare providers.
An Australian limited liability partnership has been established to help fund the purchase, encompassing three buildings at 255-257 Gympie Rd, Kedron, for A$21,520,000.
A total of 296 A$50,000 units in Augusta Kedron Partnership are for sale through Mike Houlker, Samara Phillips and Sarah Prebble of Bayleys' Auckland-based Investment Products and Syndication division. The offering, which is open to New Zealand and Australian investors, closes on March 18.
"This is a well-located, high-exposure property with five established tenants and annual fixed rental growth, and is offering investors an attractive income return paid monthly," says Phillips.
"The offering is forecast to make cash distributions to investors of 6.10 per cent per annum, after Australian and New Zealand tax, for the periods ending June 30, 2019 and June 30, 2020. The returns will be paid in Australian dollars so New Zealand investors have the option of depositing them into an Australian dollar bank account or converting to New Zealand dollars."
Augusta Funds Management executive director Bryce Barnett says the property comprises three well-presented buildings with a total net lettable area of 4579sq m on an 8909sq m site.
"We are conservative in our investment approach and understand that our investors want us to focus on preservation and growth of capital and sustainability of monthly returns and this offering was chosen with that at the forefront of our considerations," he says.
"The property is 100 per cent leased with a weighted average lease term of 7.3 years and has assured rental growth through fixed annual rent increases of between 3 and 4 per cent across all of the leases."
The anchor tenant is Creche & Kindergarten Association (C&K), which was established in 1907. "It currently has about 400 childcare centres, making it one of Queensland's largest not-for-profit early-childhood education providers," says Barnett.
"Its newest flagship childcare centre was completed on the site in 2018 with an initial 15-year lease term. It has also established its national administration office in another building at the property on an initial 10-year lease until 2028."
Barnett says C&K's two leases generate 54 per cent of the offering's income. Other tenants include ASX-listed aged-care provider Ingenia and multinational paint manufacturer and marketer Dulux, which has had a retail outlet on the site since 2007.
The property also has 136 carparks and the buildings have a low 33 per cent site cover, says Barnett. "This opens up add-value expansion and development options.
"The established and popular inner northern suburb of Kedron is about 7km from the Brisbane CBD and the demographic of the area provides substantial demand for childcare facilities," says Barnett.
"The property also benefits from its high-exposure position with two road frontages including 80m of frontage to Gympie Rd, a major arterial with an average passing daily traffic count of more than 70,000 vehicles. It is also 500m from the Airlink Tunnel and close to public transport and shopping centres. In our opinion, these features support a high underlying land value."
Australian property will continue to be a strategic focus of Augusta Funds Management, says managing director Mark Francis. "Investment in this Australian commercial property is a great way to diversify our clients' investment portfolios and benefit from strong economic conditions and growth in Queensland.
"We now have 11 properties in Brisbane valued at about A$136 million under management."
Francis says Augusta's focus will continue to be on Brisbane and the wider Queensland area given its relative value advantages over Sydney and Melbourne. "Queensland properties we manage are performing well, with the majority showing good capital growth in recent years.
"Queensland's GDP growth of 3.7 per cent remains ahead of the Australian national average of 2.6 per cent and infrastructure and major projects along with significant roading and rail upgrades continue to create positive business and investor sentiment."