With the wall of cash dividends hitting investors’ accounts over the coming months due to surging iron-ore prices, there is one question top of mind: What to do with the cash?
Industry analysts are predicting the dividend windfall from BHP Limited (ASX: BHP), Rio Tinto (ASX: RIO) and Fortescue (ASX: FMG) could top $65 billion over the year, in addition to the $7 billion from the Big 4 banks. With the current cycle of almost zero cash rates, the race is on to find sustainable income-producing investments.
Amid the noise of an exciting investment market, there are solid, high-yielding investment opportunities in the periphery of the action that offer both security and good returns.
How to find property assets that stack up
Australians love affair with property has become even more pronounced since the initial shock of the COVID-19 pandemic panic set in. We are both staying and investing locally. House prices from the east coast to the west coast have sky-rocketed and commercial and industrial assets are in hot demand with a raft of banks and non-bank lenders ready to lend money.
The level of appetite and competition in this space is highlighted in Stamford Capital’s latest Debt Capital Markets Survey, which tracks lender sentiment and the latest trends in the real estate debt market.
Based on responses from over 100 lenders, including banks, non-banks and private financiers, the survey found a “dramatic swing from the bleak outlook a year ago” when capital dried up, leverage levels decreased and lending criteria tightened.
Carried out in March this year, the survey found lending appetites were back at pre-COVID levels with increasing deal competition from a growing pool of non-bank lenders expected to compete more heavily on price and force down interest margins.
Private capital chasing higher yields in the booming property market has seen a large increase in the number of new non-bank lenders offering construction and investment loans this year.
While the pool of debt is available, and still relatively cheap, the trick is trying to find the property assets that stack up. This is where an experienced property fund manager can sort the wheat from the chaff. Sourcing the asset is one thing, knowing if you are paying too much is another. Selectivity is the key.
Mining the macro and geographical factors
Looking at macro factors and geographical location is also vital. Where are the industrious activities happening? City or regional, coastal/ports or mining? The mining industry for example has seen a significant uptick since June 2020. Mining exploration in Western Australia is almost at record levels and the capital raising pipeline is strong.
The Australian Securities Exchange notched up 42 IPOs in mining-related businesses over the past 12 months to April 2021 and despite the Covid-19 pandemic, is well ahead of other hotspots including Toronto, with 28, and London with two, according to data compiled by Bloomberg.
With the recent news of a $500 million investment in the Kalgoorlie-Goldfields region by Lynas Rare Earths, along with a $400 million commitment from Evolution Mining (ASX: EVN) for the acquisition of a collection of Northern Star (ASX: NST) mines on the western side of Kalgoorlie, and BHP recently revealing it has struck a deal to supply nickel from the region to Tesla, the region is experiencing a level of sustainable economic activity not seen for many years.
So, it appears on a macro level, locations near to, and supporting the burgeoning mining exploration and production sector seem sensible. Resources need resources, including human capital. But accessing large commercial and industrial assets in those regions is not an option for many individual investors.
A golden commercial opportunity
It takes a skilled property fund manager to find the asset and assess it on its merits.
In the case of commercial property, is it tenanted, to whom, and for how long (WALE)? What are the costs associated with acquiring and managing the property? What is a fair acquisition price and how will it be funded? If everything stacks up, then a due diligence process will follow. Lenders are appointed and capital is raised (normally to the tune of 50% debt funding by banks/lenders and 50% by investors).
For both groups, returns need to be negotiated. And in the case of capital provided by investors, a yield or distribution based on the rental income received will be passed on monthly or quarterly, for the life of the investment, which usually stretches to between five and seven years.
Perth-based M/Group has recently gone through that process on a macro and financing level and plans to invest in a large format, fully leased 6000 square-metre commercial asset in Kalgoorlie, Western Australia forming the Boulder Road Property Trust.
In the heart of the Goldfields, Kalgoorlie is home to 30,000 people, swelling to 40,000 in boom times. With three national tenants locked in for a WALE (Weighted Average Lease Expiry) of 8.08 years, the fund is targeting monthly distributions to wholesale investors of 8% pa for a period of seven years (unless the asset is sold prior and capital returned). That’s 7.5% higher than the current cash rate. Importantly, the tenants are high quality and essential to the locals and the resource sector – RSEA, Autobarn and Heatleys.
M/Group’s Latest Investment OpportunityRead more
A brand new opportunity to invest in an income asset fund and partner with M/Group in the acquisition of a newly constructed, fully leased, large format retail property.
Learn more about how this property and its tenants will service their community, while providing investors with a target distribution of 8% p.a paid monthly by visiting: www.boulderpropertytrust.com.au
Exciting First Steps for Young FamiliesRead more
While nothing might be as exciting as a baby’s first steps, when a child’s early milestones coincide with the security of your own home in a supported family-friendly community, there really is cause for celebration.
The Wedge Wellard is becoming a haven for young families and first home buyers who have successfully escaped rising rent rates to secure their own home.
The growing community is located on the doorstep of natural bushland and next door to a private primary and high school. Its parks and playgrounds have already created a welcoming hub for playdates and get-togethers, and a childcare centre is scheduled for completion at the end of this year.
Director of Monument parent company M/Group, Mr John Wroth, said the estate has everything a young family could need and is providing affordable home options at a time when rental prices and availability are putting huge pressures on our community.
“Perth is undoubtedly in a housing crisis and first-home-buyers are amongst the most disadvantaged. Many developers have continued to focus on moving larger lots in the peaking market and too many renters are facing price increases or eviction.” he said.
“Despite the soaring market conditions, we are not only holding our prices, but creating product that will help create house and land packages for under $300,000 – getting families out of the rental cycle and into a growing community.”
The Wedge Wellard estate is half-way complete with Stage 1 sold out and around 70% of land in subsequent releases snapped up.
Stage 4 is the estate’s newest release and has been specifically designed for families and first home buyers to get a foothold in the market.
“Our new release gives owners the added advantage of being located within walking distance to everything. It screams value at a time when affordable housing is extremely thin and interest rates historically low,” Mr Wroth continued.
“We are one of the only developers providing low-cost packages so close to Perth, so it presents an amazing opportunity for first home buyers to get in on the property ladder, which could mean enormous relief to young families.”
Stage 4 incorporates a range of strategically designed ‘skinny’ lots priced from $130,000. The land will accommodate a 3-bedroom x 2-bathroom home, with house and land packages earmarked to be priced as low as $295,000.
“We are so thrilled to see so many families now settled into The Wedge at Wellard and enjoying this very special place. We know that anyone who visits the estate will fall in love with the prospect of joining them,” Mr Wroth continued.
“We very much look forward to welcoming our new group of residents.”
Lot sizes range from 188m2 to 537m2 and titles are expected by August 2021.
For more information visit www.thewedgewellard.com.au or call Damyn Strang on 0434 070 654.
An Easy Sell For AmandaRead more
As the salesperson at the forefront of boutique property company, Match, Amanda Spagnolo has helped to showcase a countless number of beautiful apartments and terrace homes, ranging in style from urban to heritage and coastal. However, recently one stood out enough for her to make a personal investment.
M/31 Apartments by Match is located in DevelopmentWA’s visionary Shoreline precinct in North Coogee. It is the sister project to its neighbouring and highly acclaimed M/31 Terrace Homes by Match, and part of a three-site design cluster that will create an architectural fusion that interacts with the natural surrounds, connection to the ocean and extensive open space.
Ms Spagnolo was instrumental in the sell-out success of M/31 Terrace Homes, so when the apartments were released onto the market, she couldn’t help but buy one for herself.
“I wasn’t really looking for an apartment, although I am always on the hunt for a great opportunity,” she said.
“Having lived north of the river my whole life, I never thought I would venture south. However, as my work has taken me to Perth’s southern coastal corridor, I have really started to see why people find it so special.
“This part of North Coogee borders South Fremantle and is what the locals call ‘South Beach’, but the price tag is vastly different to the South Fremantle property market. I considered the M/31 apartments to be a particularly good purchase as it is also so close to the beach and all the surrounding amenity.
“After viewing the visionary DevelopmentWA video on Shoreline and what is planned for the area, I was excited about getting on board.”
M/31 Apartments by Match comprise of 28 boutique apartments. It is architecturally designed by well-known and respected Cameron Chisholm Nicol Architects and is said to ‘push the envelope’ when it comes to creating signature residences that maximise the location and space.
The apartment architecture is led by the building’s beach-side location with large balconies to capture shade in summer and sun in winter. All materials and colours are inspired by the surrounding coastal environment.
Managing Director of Match parent company M/Group, Mr Lloyd Clark, said the response from the market has been unquestionably positive. He confirmed that in just a few months, the ground floor apartments had sold out and interest continues to increase.
“This is an impressive building. The top-floor apartments are designed to stand out with a ‘floating’ illusion from the exterior and a ‘pop’ of colour to create impact. Inside, this design feature accommodates a limited supply of split-level luxury-living with dual balcony space and additional features, including a study nook,” he said.
“It’s no surprise that any astute sales consultant or property investor would see value in this development. We wholeheartedly congratulate Amanda on her purchase.”
As an ‘off-the-plan’ offer, all apartment interiors and colour schemes can be altered to the buyer’s taste during the construction phase.
Ms Spagnolo does not intend to adjust the apartment in any way as she believes the ground-floor apartment she secured will deliver great flexibility into the future.
“I’ve been living in apartments for around five years and really enjoy the security and the lock-and-leave aspect of the lifestyle,” she continued.
“While my plan is to live in the apartment, down the track I know that rentals on the coast are always in high demand, so I felt that this was a very safe purchase in both regards.
“I’m looking forward to walking to the South Freo Café strip for a Sunday breakfast. Or just bike riding to the local bakery to get a loaf of bread.”
M/31 Apartments by Match have one and two-bedroom layouts available and are priced from $350,000 for the one-bedrooms and $475,000 for the two bedrooms.
For more information visit www.m31apartments.com.au or call 0432 660 066.
Heritage Wool Store a Chance for Unique Commercial Creation in FremantleRead more
Once the nerve centre of Fremantle’s wool industry, this landmark heritage warehouse provides a blank commercial canvas and opportunity to create the next chapter of history.
Redeveloped by M/Group as Heirloom by Match in 2016, the former Dalgety Wool Store has been transformed into a New York-style industrial warehouse with 183 completed residential apartments and a dual-use commercial space, which has been listed for sale at $1.6 million.
The commercial site, which has been pitched as a café, restaurant or wine bar, offers 260sqm on the ground, with a soaring six metre ceiling height creating potential for additional floor space with a creative mezzanine or extra floor.
Largely unused for two decades, the Dalgety Wool Store has stood as a significant icon in the port city’s streetscape for almost 100 years.
It was originally part of a group of wool stores that occupied the entire street block and is now the only remaining one adjacent Fremantle Harbour.
Monumental in scale and form, the property was built in 1923 to cater for WA’s burgeoning wool industry from the end of World War I until the late 20th century, and was commandeered by the US Navy 7th Fleet as part of the combined allied World War II effort.
M/Group director Lloyd Clark said the $130 million Heirloom redevelopment had leveraged the existing structure to create a unique warehouse conversion.
Mr Clark said while the listing at 184/51 Beach Street had been positioned as a commercial enterprise, the dual zoning also fostered the prospect of a residential conversion.
“This particular listing…has created interest around the endless possibilities for a custom fit-out whilst designed around the exposed feature heritage red-brick, the 100-year-old jarrah columns and the exposed timber ceiling,” Mr Clark said.
“The space boasting 100 years of genuine Fremantle history lends itself to use as a café, restaurant, gallery, wine-bar or even a funky office. As the space is a shell, a complete custom fit out is available for the buyer.”
Mr Clark said the redevelopment paid homage to the building’s history.
“It was a goal to retain as many of the heritage elements as possible throughout the building and this was achieved by keeping or re-using over 85% of the original heritage fabric,” he said.
“New York-style conversions have become popular in recent years especially when considering living and/or working in a genuine warehouse environment, a limited prospect in Australia when compared to overseas.
“Developers had previously been hesitant to touch historic fabric due to the risks and unforeseen costs compared to the low cost, high profit ‘cookie-cutter’ buildings that were materialising across the city.”
Design experts say heritage renewals have long been popular for businesses and commercial enterprises, but required an astute architect with foresight and respect for the history of the property.
Nedlands architect Suzanne Hunt said there was a sense of romanticism associated with refurbishing historical buildings, despite the obvious constraints of working within heritage protections.
“There’s a romance about it,” Ms Hunt said. “People just love heritage buildings.”
“If you go into a heritage building that has been refurbished well by an architect, you have this wonderful feeling of history. There is this wonderful layering of history, the old and the new, and I think that gives a lot of opportunities for different types of design that has more of a depth of design in it.”
“Heritage buildings give character and it doesn’t matter what purpose or business you’re putting in there, you’ve got this wonderful sense that the building is old, it has its own history and you’re just making more history.”
Ms Hunt said refurbishing heritage buildings was possible while remaining cognisant of the heritage listing and ensuring respect for the old fabric.
“If you’re putting a refurb or buying a heritage building, there’s a fallacy that you can’t do anything. That’s actually not true,” she said.
“Good heritage design is saying we’re going to respect the old building and we’re going to put something contemporary…If you understand the history of the building, you can reinterpret that history in a contemporary way through your design.”
By Nicole Cox, realcommercial.com.au, 3 June 2021
Heirloom Takes Home Another WinRead more
Boutique apartment company, Match, was honoured to take home its third Heritage Award for its work in transforming Fremantle’s iconic Dalgety Wool Stores into unique residential industrial warehouse apartments.
WA Apartment Advocacy hosted the 2021 WINconnect Apartment Awards for Excellence over the weekend celebrating those who have played an instrumental role in introducing Perth to the idea of design and amenity-led urban living through apartment development.
Heirloom by Match is one of the largest heritage renewals in the State, and award judges acknowledged “…Match demonstrated fearlessness and innovation in transforming this heritage building into an exemplar of what the City of Fremantle can expect from future developments of a similar ilk.”
The site had sat largely unused for 20 years prior to completion in 2016 and now with all apartments occupied the judges said the project is “…a charming apartment community that pays tribute to its heritage roots.”
Managing Director of parent company M/Group, Mr Lloyd Clark said the awards are a great honour to be recognised and acknowledged by the industry and peers.
“Drawing on our experience with heritage renewals, we knew from the outset that this project would present challenges, however we also saw it as an extremely important opportunity.
“Match is in the business of developing signature properties. It is our firm belief that people want more from their homes, and today Heirloom residents are creating their own space amidst 100 year old Jarrah beams and original heritage features,” he said.
Heirloom by Match was designed by Dominic Snellgrove of Cameron Chisholm Nicol and constructed by national top tier construction company, Built. The development team worked in collaboration with the City of Fremantle, State Government and heritage authorities to achieve a positive outcome.
“Heirloom is unquestionably one of Match’s most significant development projects in the company’s 20 year history. Its location close to Fremantle’s café strip and between the river and the beach is ideal, and it has helped to activate the City of Fremantle and its growth” Mr Clark continued.
“The renewal process was sensitive in nature and proved extremely complex. However, the recognition and accolades we have received are both humbling and extremely rewarding.”
Match had previously been awarded the Heritage Council’s ‘Conservation or Adaptive Reuse of a State Registered Place’, and the prestigious Gerry Gauntlett Award; recognising an outstanding achievement of adaptive reuse in Western Australia for the Heirloom Apartments in 2017. Match was also recognised with the Gerry Gauntlett Award prior to this in 2008 for its highly acclaimed Home warehouse apartments located in Perth CBD and is responsible for other heritage-listed projects such as Maymont in Maylands and Clocktower in Inglewood, which effectively injected new life into the area, as well as a range of cutting-edge design-inspired apartment properties throughout Perth.
For more information visit www.heirloombymatch.com.au or contact 0432 660 066