Rental Reversion Cements Cadence’s Port Melbourne Buy

It’s good buying in Melbourne, but liquidity remains a major challenge in the market. So says Cadence Property Group chief executive Charlie Buxton, who has just put his foot on another business park, this time at Port Melbourne. Cadence has acquired Aquatica Business Park, a 1.7ha site at the corner of Lorimer Street and Todd Road, which comprises nine office and warehouse units with a total gross lettable area of 10,222sq m, for about $40 million from Dexus’s unlisted Wholesale Property Fund. It’s the asset manager’s fifth acquisition in its Cadence Industrial Investment Partnership fund, which is capturing structural tailwinds in Melbourne’s inner-city industrial market. Buxton said land scarcity and rezoning constraints were providing a strong investment thesis for Fishermans Bend. And while the absentee-owner surcharge has given him an advantage in market, long term it will cause problems for Victoria, Buxton told The Urban Developer . “Despite us being able to get a bit of an advantage in the market at the moment, long term we would support the removal of that tax,” Buxton said. “It’s detrimental to the market, we want liquidity. All the international capital is getting [reallocated] to NSW. “The absentee-owner surcharge is a big issue in the industry in Victoria. Foreign owners are being charged an additional 4 per cent of the land value.” ▲ Cadence Property Group chief executive Charlie Buxton said the absentee-owner surcharge was causing liquidity challenges in Victorian markets. Buxton said this had led to a flight of capital from Victorian markets into those north of the border. The core-plus Cadence Industrial Investment Partnership is planning to deploy $400 million to $500 million with a targeted return of up to 12 per cent. Buxton said while Melbourne’s south-east “probably has the best fundamentals”, Cadence was looking to other sub-regional markets across the eastern seaboard. Rental reversion opportunities were strong within Port Melbourne, according to Buxton, where tenants “pay a premium”. The newly acquired business park also comprises significant at-grade carparking, which is well-utilised in the evolving Fishermans Bend area. “Port Melbourne is tightly held by institutional groups and, with Industrial 1 zoned land becoming increasingly scarce north of the West Gate Freeway, we anticipate enduring demand from tenants and investors,” Buxton said. The Aquatica Business Park is 89 per cent leased to a diversified group of tenants, and has strong income reversion opportunities. Buxton said rents were now about 20 per cent below market value. Buxton said Cadence was seeking to create a diversified portfolio across product types and geographies, with its latest acquisition a smaller format warehouse and office development. The asset is within the Fishermans Bend National Employment and Innovation Cluster (NEIC), a Victorian Government-designated priority precinct for industrial and technology-based employment.

Rental Reversion Cements Cadence’s Port Melbourne Buy

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