Quadrant Investments will seed a fund – QI Diversified Income Trust No 1 – with a Midland office acquired for $7.25 million.
The double storey 1367 square metre building, 2 Keane Street, is fully occupied by the state government’s Work Ministry.
On a 984 square metres at the north east corner of the Great Eastern Highway – about 1.7km north of the CBD – the property contains end of trip facilities and 33 car parks.
Its Weighted Average Lease Expiry is about seven years.
The sale price reflects an initial 5.78 per cent return.
The market yield is 6.25pc.
“This asset not only delivers an A-grade tenant in the WA state government…but also delivers a strategic central location within the Midland city centre – a locality that has benefited already from almost $1.5 billion worth of investment from the government and private sector, with more to come,” Savills’ Barney Dear, who brokered the deal, said.
QI Diversified Trust No 1
The closed-end wholesale QI Diversified Trust No1 intends to hold diversified, geographically spread product worth a total of c$40m (story continues below).
A recent capital raising closed oversubscribed however more are planned as the portfolio grows.
“The first acquisition provides this trust with a stable income from a reliable tenant in the WA state government until July 2028, a highly prized attribute in the current landscape which has seen periods of uncertainty and continuing low returns below current inflation from bank term deposits,” Quadrant managing director Phil Fogliani said.
“The solid attributes…provide us with an exceptional foundation for the trust that we can build on with future acquisitions,” he added.
“Perhaps one of the most important and valuable reasons we saw [to acquire the asset] was the strong prospects for future rental growth.
“Our assessment of the economic rent required to justify the construction of a new building of comparable quality in the Midland city centre, including matching its exceptional 1:41 sqm car park ratio, is significantly higher than the current passing rent, which will not only improve the prospect for rent growth upside but also in retaining the existing tenant”.
The trust is expected to return investors seven per cent per annum, distributed monthly.
Quadrant manages assets worth nearly $60m – all acquired since 2018.