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.

 

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

Property company, M/Group, has submitted a development application (DA) to the City of Albany that could introduce a Bunnings Warehouse to the Chester Pass Mall shopping precinct.

Approval of the application would see the existing Bunnings currently located on Albany Highway relocate to a 14,000sq.m purpose-designed space. A number of additional improvements to Chester Pass Mall would also be made, including carpark shelters and upgrades by other retailers.

M/Group Director, Mr James Collis, said introducing a new Bunnings to the area will be a welcome addition to the precinct and could expand Chester Pass Mall’s its catchment across Great Southern region.

“In addition to the 35,000 people within Albany, we anticipate that families throughout the Greater Southern region will travel long distances to shop here. This puts Chester Pass Mall in an extremely unique position and could provide benefits to all businesses in Albany,” he said.

“The approval of our development application would create a shopping experience that complements surrounding retail found along Chester Pass Mall and offers improved traffic management and parking to home improvement customers.”

Bunnings Director of Property Andrew Marks said should the development application be approved the new store will provide Albany residents with an even wider range of home improvement and outdoor living products in a bigger and better store.

“The new Bunnings Warehouse development will feature a fully enclosed timber yard, nursery, more car parking for our customers as well as offering job opportunities for local residents.

“All of our team members from the existing Albany store will transfer to the new store once complete and will continue to be on hand to provide customers with expert advice on their D.I.Y projects.

M/Group National Shopping Centre Manager, Ms Cherie Daly, said she is confident that a Bunnings in the area will be welcomed by the community.

“I’ve no doubt that a larger Bunnings will be welcomed by both the local and extended community,” she said.

“Should our DA plans be approved, Albany would see an injection of $15 million of investment during the construction phase alone.”

While a Chester Pass mall centre refurbishment is also being strategised for the longer-term future, plans are yet to be confirmed.

M/Group has acquired a third sub-regional shopping centre asset, Pialba Place Shopping Centre in Hervey Bay, QLD. The acquisition was made as part of an investment model that has already proven highly successful in the first two of its shopping centre assets.

The Centre was acquired in an off-market transaction for $36million, of which $22million was raised through a company-managed property investment fund. The purchase price represents a yield of approximately 8% on passing net income. The asset is 3.5 hours drive from Brisbane at the gateway to Fraser Island and located on a 4.38 hectare site that occupies an island block surrounded by three street frontages.

M/Group Managing Director, Mr Lloyd Clark, said the site was identified for its development potential and possesses the same return prospects as the company’s current shopping centre portfolio.

“Our model is to acquire assets that provide strong income returns to our investors whilst implementing strategies that reposition the assets. We first look to acquire assets with solid fundamentals and overriding lease covenants that also offer value add opportunities that can improve both the shopping experience and investment returns,” he said.

“The model has already proven successful at Wodonga Plaza in Victoria, which recently recorded an independent valuation uplift of $10.5million in just over a year. We also expect similar results from our WA Asset in Albany, Chester Pass Mall, following the announcement of development plans and an agreement with an ASX National retail group to relocate its premises to the Centre.
Wodonga Plaza was acquired for $ 43.5 million in 2017 and is now operating at almost 100% occupancy. It’s increased Weighted Average Lease Expiry (WALE) has gone from under 4 years to just over 6 years.

Albany’s Chester Pass Mall received a valuation uplift of $5 million from its original purchase price of $20million, again on the back of a ‘hands-on’ leasing strategy. M/Group is expecting a further significant valuation up-lift following the agreement with an ASX National retail group, as well as pursuing other tenant negotiations to further improve amenity at the Centre.

M/Group Director, James Collis, who manages the company’s assets, said M/Group has already identified a number of opportunities at Pialba Place that could further increase the shopping centre’s capital value in the short, medium and long term, including a gap analysis that provides several opportunities for future retail.

“Pialba Place is extremely well located and backed by a good local economy, growing population and a number of blue-chip tenants, including Coles and Big W. This, of course, is pivotal in providing secure long-term income,” he said.

“M/Group is already working on plans to reposition the Centre, including investing in a refurbishment. We take a very hands-on management approach to back filling and renegotiating tenancies for immediate gains.

Settlement of Pialba Place took place Friday, 8 February 2019.

M/Group incorporates expertise in built form and land development, construction and building maintenance, funds management and property management.

An over-subscribed property syndicate with more than 90% repeat investors has enabled Perth-based property company, M/Group, to secure the acquisition of Wodonga Plaza in regional Victoria. It represents the M/Group’s second regionally located shopping centre acquisition from Vicinity Centres, and its first step into growing an asset portfolio in the eastern states.

M/Group was established in Western Australia over 15 years ago and has evolved into a diversified property company that offers investment opportunities across land, residential, construction and income producing assets.

M/Group Managing Director, Mr Lloyd Clark, says the company’s targeted approach to identifying regionally located assets with good lease covenants and value-add potential has attracted significant investment interest.

“Every company aspires to having a network of investors that trust what they do and how they do it. We are really excited to be taking this group of loyal and new investors into the eastern states,” he said.

“Rather than target fully leased assets at capped rates of 5% – 7%, our interest is in securing properties that not only offer excellent income but also present development, refurbishment or lease re-positioning potential with the aim of achieving capital uplift as well as delivering excellent cash flow income. It is a similar strategic and considered approach we take across all our property activities and historically we have delivered quality investments and good returns.”

Wodonga Plaza attracted a sale price of $43.5 million, of which (circa) $26 million was raised through investment; M/Group’s largest capital raising to date.

The sale closely followed the company’s acquisition of the Albany Brooks Garden Shopping Centre in Western Australia earlier this year. In just over six months, M/Group has accumulated (circa) $70 million under management in income producing funds that yield an average return of 10% plus significant potential for capital upside.

“Wodonga Plaza is a great opportunity in a great regional city that is the gateway to Victoria from NSW. It is currently and will continue to be the largest centre in the region and we have already secured a new 10-year lease with Best and Less with multiple other tenant negotiations underway,” Mr Clark continued.

M/Group’s investment model utilises its Australian Financial Service License to make new opportunities available to a broader market that may not traditionally have access to this investment class.

Wodonga Plaza sits on approximately 4.4ha on island site with 4 Street Frontages and gross lettable area is some 17,200 sqm. Key anchor tenants include Target and Coles, with three current mini majors Amcal, Reject Shop and Best and Less, and around 55 specialties stores.

M/Group targets tenanted assets Australia-wide with a value proposition of around $10million to $50million. The success of this recent syndicate has fast tracked the release of its next syndicate where a similar response is expected.

For more information contact James Collis on 08 9324 3855 or visit www.mgroup.com.au/investments.

Highly reputed property acquisition specialist, Mr James Collis, has joined M/Group as director of its income funds business with a sole focus on increasing the company’s income asset capacity.

Mr Collis will target the acquisition of strategic high quality properties, in all markets including retail, commercial and industrial, with strong revenue streams and blue chip tenants. His work will boost M/Group’s existing investment portfolio of property development and land funds and broaden the company’s investment base across an extended range of product.

Mr Collis believes the company’s latest investment focus will create a niche proposition in the Western Australian investment market.

“There are some really good quality properties on the market at the moment and, at the same time, people are looking to invest in secure, income producing assets,” he said.

“M/Group is targeting assets Australia-wide with a value proposition of around $10million to $30million. These tenanted assets provide investment opportunities for small to moderate-level investors, providing access to a low-risk investment class usually reserved for large-scale transactions.”

M/Group intend to utilise its retail funds management license to allow these new opportunities to be available to a broader market who may not traditionally have access to this investment class. The company’s asset funds will target annual returns of circa 8% with a minimum investment requirement from $10,000.

M/Group initially entered the asset funds market in 2013 with the acquisition of the strategically located Officeworks building in Bunbury. The asset incorporated a blue-chip tenant, long lease and high forecast returns. The fund was fully subscribed within just weeks of its release

The appointment of Mr Collis follows a succession of oversubscribed investment funds managed by the company, including development product in Leederville, Como and Fremantle.

M/Group Managing Director, Mr Lloyd Clark, said Mr Collis’ credentials are strongly aligned to the company’s success in identifying and procuring strategic investment opportunities. He said his appointment supports the company’s continual growth through the introduction of new and highly sought after product.

“Over the last twelve months, M/Group has identified strategic opportunities to support business growth through diversity of opportunities. Last year we introduced a land development division led by John Wroth, and our property management and construction companies continue to build momentum,” Mr Clark said.

“James’ background and experience represents an excellent fit for M/Group’s development as a vertically integrated business. We are extremely pleased to welcome James onto the team.”

Under the direction of Mr Collis, M/Group is currently negotiating the acquisition of some $60million worth of income producing assets with the release of new funds anticipated for later in the year.

For more information on income investment funds please contact James Collis on (08) 9324 3855 or James.Collis@MGroup.com.au