Property fund manager acquires suburban office park in inner Perth commercial locality.
Perth-based property funds manager Quadrant Investments acquired its twelfth asset since launching, after concluding the settlement of 110 Erindale Road, Balcatta for its QI Value Add Income Trust No 3. The newly-established Trust, which is the third in Quadrant Investments’ “value-add” series, is a single-asset Trust that has acquired a substantial suburban business park situated on a large corner site.
The acquisition features 3,856 square metres of office and commercial space split across three levels and two buildings. The business park sits on a huge 6,756 square metre corner site situated at the high-profile lighted intersection of Erindale Road and Balcatta Road. The site also includes the benefit of an additional third frontage to Mumford Place, providing excellent ingress and egress for good measure.
The property transacted for $8,100,000 via an on-market process handled by Colliers agents’ Shane Isaacs and James Baker.
The desirability of the property was greatly aided by being close to fully leased, at 94% occupancy, to a strong list of established tenants. The occupying tenants include a range of professional services and NDIS service providers, all no doubt attracted to the prominent exposure provided by the location and significant car parking capacity at the complex, totalling 110 bays.
Quadrant Investments’ Managing Director, Phil Fogliani, explained that the foundation of the acquisition was based on strong property fundamentals which only improved further during the investigation process. Notably, the purchase price represented a significant discount to replacement cost, which was the highlight, according to Mr Fogliani.
“With the building replacement cost alone assessed at $14.9 million, the total replacement cost, once you add in the underlying land component, is just over $20 million, far greater than the acquisition price,” Mr Fogliani said.
This exceptional value proposition sets the stage for strong rent growth, according to Mr Fogliani, with the economic rent needed for a new build in this location of over $350 per square metre net being far greater than the current passing rent, which currently averages a low $176 per square metre.
The property was added to a newly established fund within the fund manager’s “Value Add Income” series, which seeks to deliver strong capital growth via repositioning or additional development and aims to provide regular and consistent income distributions for investors once stabilised. The characteristics of 110 Erindale Road, Balcatta of immediate and ongoing stable income and excellent prospects of capital uplift in the short to mid-term from refurbishment upgrades see this asset fitting the profile, according to Mr Fogliani.
The QI Value Add Income Trust No 3 is aiming to deliver its investors with total returns (internal rate of return or IRR) of in excess of 12% per annum, with normalised income distribution targets of 7.0% plus per annum. Distributions are paid to investors on a monthly basis, which is a beneficial differentiator to many other funds in the market.
The office sector has been in the spotlight recently, particularly on the east coast, where the ‘work from home’ factor has seen employees spend more time at home than in the office. Perth, however, never quite matched the extremes of the east coast and employees have returned to the office in greater proportions than elsewhere in the country. There is no doubt though that employers have a strong preference to get staff back to the office, and, conversely, employees are coming to recognise the value of being in the office, particularly when it comes to collaborative work with colleagues, career development and ongoing learning. With this in mind, Quadrant Investments has seized upon an opportune time to buy office space.
“While there is no doubt some adaptation is still ongoing to settle on what the ‘new normal’ might be for flexible working arrangements, we see upside potential for well-located inner suburban office assets that are conveniently located for not only business’ clients, but also their staff. We see a place for office assets that are close to home, easily accessed, ideally provide the flexibility of readily available staff parking, and provide an affordable occupancy cost for tenants compared to central locations,” Mr Fogliani added.
The latest successful acquisition adds to Quadrant Investments’ growing portfolio of assets under management, which has grown to just under $110 million. The acquisition continues Quadrant Investments’ disciplined acquisition strategy based on its core principles and remains active on the acquisition hunt.
Key Highlights & Further Information:
About 110 Erindale Road, Balcatta
- Business office park complex with total commercial office area of 3,856 square metres across two buildings and three levels.
- Land area of 6,756 square metres.
- Prominent location at the intersection of Erindale and Balcatta Roads, with additional third frontage to Mumford Place.
- Exposure to passing traffic of approximately 27,000 cars per day. (Source: MainRoadsWA)
- 94% leased to a range of services businesses and NDIS operators.
- Sale process managed by Shane Isaacs and James Baker of Colliers.
About QI Value-Add Income Trust No 3
- Closed-end, Wholesale Unit Trust structure established by Quadrant Investments, the holder of an Australian Financial Services Licence.
- Initial Trust term of four years.
- The Trust’s total target return (IRR) for the initial term of the trust is 12% pa (income and capital growth).
- The Trust’s target is to deliver ongoing stabilised income of 7% p.a. paid monthly.
About Quadrant Investments
- Quadrant Investments (QI) is an established property funds management business based in Subiaco, Western Australia.
- QI has assembled key management personnel with significant experience to execute QI’s investment philosophy and asset selection criteria.
- QI Directors: Phil Fogliani (Managing Director) and Alex Gregg (Director)
- QI provides opportunities for investors to partner with the QI Directors in compelling property investment opportunities.
- The Directors and their related entities are active investor participants in every fund.
- QI holds and operates under its Australian Financial Services Licence (No. 493066).
- QI currently has funds under management (FUM) of just under $110 million across over 105,000sqm of land and 44,000sqm of buildings.
- QI is co-owned and backed by one of Australia’s oldest private companies, the 110-year-old Richard Noble & Company.
QI’s key personnel and contacts are:
Phillip Fogliani Managing Director +61 (0) 408 900 587
Alex Gregg Director +61 (0) 417 914 631
About QI Value-Add Income Trust No 3
- Closed-end, Wholesale Unit Trust structure established by Quadrant Investments, the holder of an Australian Financial Services Licence.
- Initial Trust term of four years.
- The Trust’s total target return (IRR) for the initial term of the trust is 12% pa (income and capital growth).
- The Trust’s target is to deliver ongoing stabilised income of 7% p.a. paid monthly.
About Quadrant Investments
- Quadrant Investments (QI) is an established property funds management business based in Subiaco, Western Australia.
- QI has assembled key management personnel with significant experience to execute QI’s investment philosophy and asset selection criteria.
- QI Directors: Phil Fogliani (Managing Director) and Alex Gregg (Director)
- QI provides opportunities for investors to partner with the QI Directors in compelling property investment opportunities.
- The Directors and their related entities are active investor participants in every fund.
- QI holds and operates under its Australian Financial Services Licence (No. 493066).
- QI currently has funds under management (FUM) of just under $110 million across over 105,000sqm of land and 44,000sqm of buildings.
- QI is co-owned and backed by one of Australia’s oldest private companies, the 110-year-old Richard Noble & Company.
QI’s key personnel and contacts are:
Phillip Fogliani Managing Director +61 (0) 408 900 587
Alex Gregg Director +61 (0) 417 914 631