MPF outlays $24.5m on suburban offices in Melbourne, Perth

The recently renovated Mulgrave office cost $13.9 million following an off-market campaign.

Mair Property Funds has purchased two suburban offices, in Melbourne and Perth – completed the renovation of one, and successfully closed the $60.6 million flagship trust which will hold them – in what has been a busy few months.

The most valuable asset, 6-8 Compark Circuit in Mulgrave (pictured, top and right), is MPF Diversified Fund No 2’s first Victorian purchase – costing $13.9 million.

The Mulgrave office used to be Johnson and Johnson’s local headquarters.

Over two floors, the 3153 square metre commercial building sits on a 4766 sqm site within the Monash National Employment and Innovation Cluster.

MPF completed a $300,000 “general program to uplift the presentation” commenced by the vendor – and just committed Device Technologies on a new five year agreement to the ground floor.

Colliers International’s Ash Dean and John Howell are running a campaign to rent the first level (1650sqm) – area which would be considered A-grade.

This building used to be the local headquarters of Johnson and Johnson which relocated to the Spooner family’s Caribbean Park in Scoresby, eight kilometres away.

Mulgrave is about 21kms south east of Melbourne’s CBD.

Sole Victorian asset in an area MPF was eyeing

“We have been monitoring this [Monash] market for some time, with population growth and infrastructure spending expected to support the ongoing strength of the Victorian economy,” a MPF statement said.

The region’s commercial market “has enjoyed a particularly strong performance in recent times,” the company said, pointing to the 3.2 per cent vacancy rate, the lowest of all capital city markets according to the Property Council of Australia’s January, 2020, Office Market Report.

“Combined with the asset’s location in a robust and continually evolving precinct, we expect these conditions should hold key benefits for the acquisition, with limited supply and rising rents in the CBD expected to drive higher demand for suburban offices and support rent growth in the centrally located south east”.

Western Australia deal is for home turf

In Western Australia, MPF has spent $10.6m on 1162 Hay Street – it said, to “take advantage of the recovering West Perth office market”.

On the north west corner of Havelock Street – two blocks from MPF’s headquarters – the A-grade commercial acquisition is leased to EBM (Elkington Bishop Molineaux) Insurance Brokers.

With 1423 sqm of lettable area it occupies an 1863 sqm plot with an open-air car park – land it intends to develop.

The investment with a 5.5 star NABERS rating sold on a 7.2pc yield.

Transact Capital managing director Alex Gismondi was the sales agent.

“With the site remaining significantly underdeveloped, Mair Property Funds sees potential to build on initial renovations to the property conducted in 2015 to further enhance its value and maximise its long-term appeal to the existing and future tenants,” the MPF statement said.

MPF Diversified Fund No 2

MPF spent $10.6 million on the “underutilised” West Perth office – two blocks from from its headquarters. Source: Google Street View.

Both the Mulgrave and West Perth offices were acquired following off-market campaigns.

They will be retained with six more investments within the MPF Diversified Fund No 2, the parent’s second flagship trust – promising monthly distributions and a 7.5 pc annual return, and which recently closed fully subscribed.

“We are excited by the growth and potential and strong rental income that these assets offer our investors, and are looking forward to implementing our leasing and management strategy to enhance the portfolio’s performance”.

The MPF Diversified Fund No 2 – which also holds assets in Queensland and South Australia – is valued at $60.56m and has a 4.5 year weighted average lease expiry [WALE].

Funds under management across the MPF portfolio total $280m, with 14 trusts, available to private investors.

Last November it spent $20m on the new Commonwealth Service Centre, an office in Perth’s north east Banksia Grove, which later seeded the MPF Banksia Grove Property Fund.

The 1162 Hay Street office is leased to EBM (Elkington Bishop Molineaux) Insurance Brokers.

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Marc Pallisco

A former property analyst and journalist, Marc is the publisher of realestatesource.com.au.

Marc Pallisco