MPG Funds Management has acquired another five non-metropolitan assets, this time for its Regional Cities Property Trust, which was established in September, 2018.
The total outlay is $40.98 million.
All investments are leased to the government.
The deal comes three months after MPG spent $43.5m on Rockhampton’s Bunnings Centre – for its then-new BW Rockhampton Trust.
Created by late Spotless founder Ian McMullin as McMullin Group, the investment house has purchased 19 regional properties in the last two years.
Factoring in its latest acquisitions, its assets are worth over $750m.
MPG’s five new investments
MPG is acquiring the five commercial properties on a blended yield of 7.87 per cent.
The three most valuable are in Queensland including the Centrelink/Department of Youth Justice office, at 18 Blackwood Road, Logan, 27 kilometres south of Brisbane, which cost $14.13m.
An Ipswich commercial building rented to Department of Communities (Child Safety Services) was also acquired, for $8.85m, while in Toowoomba, a complex leased to the Department of Housing and National Disability Insurance Scheme, set the purchaser back $7.4m in a deal struck last year.
Two Centrelink branches were snapped up too, one in Victoria’s Morwell, for $6.5m, the other in Moree ($4.1m).
MPG director Brett Gorman said all properties “have been carefully selected in growing regional locations for their defensive income streams and potential for capital growth”.
They are located in areas targeted for infrastructure improvements and population growth, he added.
“The Trust’s properties have proven to be a good defensive asset class in the current COVID-19 environment and are never more relevant than now with major tenant Centrelink responsible for the provision of JobSeeker and JobKeeper payments as well as other essential services,” according to the executive.
The five properties were being marketed by four agents including Colliers International’s Philip O’Dwyer, CBRE’s Xavier Rahme, Marc Leiba of Leiba Commercial and Jack Morrison of Savills (story continues below).
MPG Regional Cities Property Trust
Mr Gorman said MPG RCPT targets government and social infrastructure leased commercial property in growing regional hubs in Australia’s east.
Following the new acquisitions, the executive added, the fund holds assets worth $103.76m.
The weighted average lease expiry is about five years.
“MPG is seeking to raise a further $15m from wholesale and retail investors for the open-ended fund, which is forecast to deliver a 7pc initial annual return.
“With over eighty-eight pc of the Trust’s current income secured by government tenants and the attractive tax-advantaged cash yield compared to current cash rates on offer, [it] has been particularly well received by investors and financial advisers”.
The fund is set to continue growing, Mr Gorman said, “by targeting government-tenanted commercial properties valued up to $20m in growing regional locations, which we believe are often overlooked by the larger institutional investors and are out of reach of most individual property investors”.
Other properties in MPG RCPT include, in Victoria, the Environmental Protection Authority office in Traralgon (pictured above, right), Centre for Non Violence building in Bendigo, which includes retail, a Think Childcare Ltd complex in Grovedale and a Centrelink in Echuca.
In New South Wales, it owns the Australian Pesticides and Veterinary Medicines Authority in Armidale and a Centrelink at Wallsend.
Prior to this week, its only two Queensland investments – also Centrelink branches, in Hervey Bay and Maryborough.
“The growth in MPG Regional Cities Property Trust since its inception has led to MPG making this year’s BRW Fast 100 in March,” Mr Gorman said.
“It would seem we are already on track for next year’s list as the addition of Trevor Gorman to the team in a concentrated capacity earlier this year has allowed us to pursue more opportunities”.
MPG is said to be negotiating several more deals, not only for RCPT, but a new wholesale retail trust set to be made available for purchase in the new financial year.