Stirling Property Funds’ Diversified Enhanced Yield Fund has acquired MacGregor Home from Aventus Group for $42.15 million in a sign of confidence in Queensland’s commercial property market.
The large-format retail centre 11km south of Brisbane’s CBD has an initial yield of 6 per cent. The transaction is due to be completed on July 30.
MacGregor Home is the third asset the fund has acquired and follows the recent acquisition of two adjoining industrial assets in Newcastle’s prime industrial area of Mayfield West.
Stirling Property Fund chief executive Matthew Hyder said the fund’s investment strategy was to invest in quality commercial properties in high-growth regional and capital cities.
“Decentralisation, population growth and infrastructure investment is providing strong growth prospects for highly accessible regional cities and targeted markets within capital cities,” he said.
“These long-term demand drivers coupled with the return premium available from investing in these markets is providing compelling risk adjusted returns for investors.”
MacGregor Home is the largest large-format retail centre in MacGregor with 12,330 sqm of lettable area. Anchor tenants include such national large format retail tenants as The Good Guys and make up about 60 per cent of the lettable area. It has a Weighted Average Lease Expiry (WALE) of 6.3 years.
“The large-format retail sector has performed exceptionally strongly during the past 12 months despite the challenging broader retail environment,” Hyder said.
“With very low online penetration rates within this segment of the retail market, coupled with robust house price growth, the large-format retail sector is expected to continue to deliver attractive, resilient investment returns.”
Hyder said Stirling was positive about the medium-term outlook for the Brisbane commercial real estate market.
“Brisbane’s population grew by 1.9 per cent in 2020 which was 72 per cent more than Sydney and 19 per cent more than Melbourne,” he said.
“With the uncertain outlook for overseas migration expected to continue, Brisbane is well placed to continue to benefit from net internal migration.
“More than 930,000 people have relocated to Queensland from other states in Australia since 1981.”
The fund has a financial year 2022 target income distribution of 7.1 per cent, distributable income growth of 3.2 per cent and a six-year WALE.
Stirling is due to begin a capital-raising program during the coming weeks to support its continued acquisition program.