This article is from the Australian Property Journal archive
MELBOURNE-based Impact Investment Group has bought an office building at Carlton from Drapac for $33.55 million, to seed a new syndicate targeting high net worth investors and self managed superannuation funds.
IIG is a joint venture between Chris Lock, who is also the co-founder and CEO, and Small Giants, which is backed by Danny Almagor and Berry Liberman.
IIG has bought 200 Victoria St, a seven-level building comprising 7,000 sqm of space, of which 70% of the income is derived from the Environment Protection Authority Victoria (EPA).
Co-founder and CEO Chris Lock told Property Review that IIG and Small Giants are leading way with likeminded investors, by showing that they do not have to sacrifice social and environmental values to generate a superior commercial return.
Since establishing in January this year year IIG has successfully arranged and co-invested in three investment syndicates. The EPA building is to be the fourth and largest acquisition to date. IIG has over $55 million in assets under management in its first year so far.
200 Victoria St is currently delivering a net passing income of 6.5%, and is expected to climb to 8.7% when the building is fully leased.
The property is known as one of most sustainable buildings with a Six Star green rating, one of 16 in Australia holding that accreditation. It was originally built in the 1970s and extensively retro-refurbished in 2008, major works including extensive demolition of the internal fabric of the building, construction of additional levels and replacement of finishes and services.
The anchor tenant, the EPA has a lease with approximately eight years remaining that underwrites approximately 70% of the total net property income.
IIG is syndicating the building into an unlisted investment trust and it will be a co-investor.
The fund is forecasting income returns of approximately 11% per annum, an IRR of 18% and significant tax deferral shielding. The group is looking to raise $15-$17 million in equity, which is already fully underwritten.
Photo: Ted McDonnell
Lock told Property Review that the property was acquired off the market and “went unconditional very quickly” after IIG received overwhelming demand from investors, of which 50% were from SMSFs.
“It has exceeded our own expectations and it is being driven by investors who want to shift capital into social and environmental investments,”
He added that the market is currently flourishing with opportunities.
“The sector we are focussed on, it is in no man’s land, nothing over $60 million, which is considered too small by the major institutions and almost too big for the private investors,” he continued.
Lock said IIG’s goal is to grow its syndicates and get to a stage where it is open to institution investments.
“We are witnessing investors shifting their capital into investments with social and environmental outcomes, which is also happening on the institutional level. We want to get to a stage where we are on the radar of institutions,” Lock concluded
Property Review
