Fund manager MPG has embraced the idea of “Big Australia” after launching a $66.4 million regional property fund that will own commercial property in regional hubs like Newcastle, Bendigo, Armidale and Maryborough.
MPG is seeking to raise a minimum of $25 million from retail investors for the open-ended fund, which is forecast to deliver a 7 per cent initial annual return.
“All the properties have been carefully selected in growing regional locations for their defensive income streams and the potential for capital growth. They are new or near new and are located in areas targeted for infrastructure improvements and population growth,” said MPG director Brett Gorman.
The new fund will be seeded with eight East Coast regional properties, most of which are leased to federal and state government agencies or departments on long-leases. The minimum investment size is $10,000 with the fund to carry $30 million of debt and due to rollover in September 2025.
Mr Gorman said MPG would look to grow the portfolio “by targeting government tenanted commercial properties valued up to $20 million in growing regional locations, which we believe are often overlooked by the larger institutional investors and out of reach of most individual property investors”.
Its biggest asset is the under-construction Australian Pesticides and Veterinary Medicines Authority building in Armidale, an agricultural centre in the NSW Northern Tablelands. Due to be completed in mid 2019. the 2,475 square metre office building is secured by a fifteen year lease to APVMA and a ten year lease to the Department of Human Services..
Other assets include the office of the Environmental Protection Authority office building in Traralgon in Victoria’s La Trobe Valley, the Centre for Non Violence building in Bendigo, a United Children childcare facility in Geelong and four Centrelink properties in Newcastle, Hervey Bay, Maryborough and Echuca. The trust will also hold an $8.33 million interest in the MPG Retail Brands Property Trust.
Popular with retail investors
MPG joins a growing number of developers and investors looking beyond the major capital cities and targeting regional hotspots with growing populations and strong, diversified economies.
Investors embracing the Big Australia theme include property fund manager Quintessential Equity, which has fully-leased its $120 million new Worksafe building in Geelong and rich lister Tony Denny, who has built up a $500 million pipeline of sold-out apartment projects on the NSW Central Coast.
MPG evolved out of property developer the McMullin Group, established by the late Spotless founder Ian McMullin, and has more than $550 million of funds under management. Its retail funds are popular with retirees and mum-and-dad investors with self-managed superfunds.
The fund manager already has a track record of investing in regional property, acquiring the Tweed Hub homemaker centre in Tweed Heads on the NSW-Queensland border from listed landlord Aventus for just over $40 million in March and a Coles supermarket in the NSW Southern Highlands for $9.45 million in December 2016.