IP Generation has flipped a Torquay commercial property for a significant capital gain after converting its chief use from industrial to office and retail.
Led by Chris Lock, the fund manager is banking $40.06 million – reflecting a 5.59 per cent net passing yield – for 27 Baines Crescent, off Beach Road, near the town’s western outskirt.
It paid c$15m in 2018; that seller, Boardriders, via subsidiaries Quiksilver and Billabong, fully occupied the 1.95 hectare holding as offices, a multi-level showroom and warehousing since it was constructed 21 years earlier, but was considering vacating.
Following a repositioning by IP, the surf sector giant stayed on, for about a quarter.
The balance of the 6096 square metres is rented to Little Company’s The Bathhouse, Sou’west Brewery and yoga studio Core Plus.
Office components meanwhile are occupied by the state government backed Great Ocean Road Coast & Parks Authority and co-work provider Surf Coast Central.
The asset also has 202 car parks.
The deal comes a month since IP sold a Coles-anchored supermarket in Sydney’s Miranda to Woolworths for a speculated $68m – a 100pc capital gain in 16 months.
Last December, Mr Lock agreed to outlay $185m for Gold Coast’s Westfield Helensvale – on 8.9ha – a transaction which settled in April. QIC was that seller.
Transformative period for Torquay: agent
Fitzroys’ Paul Burns, who brokered the off-market Torquay deal, said the asset’s Weighted Average Lease Expiry is a high 12 years.
“Torquay has a tightly confined commercial precinct which is experiencing unprecedented demand from the influx of ‘sea changers’ in response to COVID and flexible working arrangements,” he added.
“The Surf Coast is the seventh fastest growing Local Government Area in Australia, according to the 2021 Census,” according to the executive.
“The recently adopted Torquay-Jan Juc Retail and Employment Land Strategy forecasts the current c22,000 population of the Torquay-Jan Juc area to surge by a further 12,000-plus residents by 2036.
“Torquay is the largest settlement in the Surf Coast region and Commercial Zoned land is almost fully occupied.
“The purchaser recognised the excellent long term rental prospects and potential of the site, and the ultra-rare opportunity to gain a foothold in one of Australia’s fastest growing regions (story continues below).
“This was reflected in the momentum built up during the off-market campaign.
“This transformative period for the Surf Coast will continue to have a profound effect on commercial property market demand”.
The purchaser, which settled yesterday, is Sevens Investments Group, led by Melbourne eastern suburb investor Ledong Zhang.
Result reflects upgrade and upside
Mr Lock, who began IP after five years as chief executive officer with the Liberman family’s Impact Investment Group, said the Torquay result reflects the c$13m upgrade and development upside – in a popular region.
“We identified value-add opportunities…consistent with our investment strategy,” he said.
“As part of the Torquay-Jan Juc Retail and Employment Land Strategy, Baines Cr is to be rezoned from…Industrial 3 to Commercial 1, the process expected to take less than 12 months” according to the executive.
Buildings cover 4000 sqm – or 20.5pc – of the holding, with an indicative scheme for more.
“[This] will promote more uses and greater density and height which will open the possibility for further development upside,” Mr Lock said.
“The property is expected to be one of the preferred sites for any new major tenants seeking accommodation in Torquay,” he added.
“Torquay essentially has no meaningful vacancy,” according to the investor.
Elsewhere in the street, Rip Curl Properties owns a 1.05ha block at the south west corner of Geelong Rd, which it acquired for $14.4m in 2007.
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