This article is from the Australian Property Journal archive
QUINTESSENTIAL Equity has picked up an industrial complex in Brisbane to seed a new $300 million fund, and is backing its active management capabilities and ongoing demand for warehouses to generate long-term income from the asset.
The private equity business paid $18.5 million for the 117 Grindle Rd property in Rocklea. It has eight separate warehouses with a gross lettable area of 20,407 sqm, on a site covering just over four hectares.
The transaction was struck on a 10.4% passing yield, including the rental guarantee on the vacancy, at 85% occupancy. When fully leased, that would will increase to 10.8%.
Colliers International’s Simon Beirne and Nicholas Evans brokered the deal for a private landlord.
Known as Master Fund No.2, the new fund raised over $145 million in equity within four weeks late last year and is structured to provide Quintessential Equity capital to acquire and value-add and core-plus commercial office and industrial properties across CBD and city fringe markets.
Quintessential Equity executive chairman Shane Quinn said the property had been on the market for some time and was overlooked due to the pending expiries with the sitting tenants.
“We saw the entrapped value in the asset which we believe will give us a competitive advantage to keep the asset let, which has been vindicated by re-signing the sitting tenants,” he said, referring to Dynamic Supplies and Small Transport. Meanwhile, Trumps has been secured as a new tenant.
“The property has multiple income streams from different tenants which reduces the single tenant risk. The vacancy level in the market is also very low which underwrites the strength of the location and the demand from the deep pool of potential tenants.”
Quintessential Equity will take a long-term view of the property, even as the industrial property market moves through a period of substantial growth.
“Despite industrial property being the darling child of the investment market, it isn’t always a fortress asset class,” Quinn said.
“We think that there is disruption coming that’s not dissimilar to office and retail. What might be regarded as A grade today, may have a different look in 10 years’ time due to changes to high bay fully automated sheds giving a much more intensive land use. We are just being a little more cautious and looking to the land value underwriting our investment more so than improvement value.”
The site is close to Ipswich Mwy, which is currently undergoing a $400 million upgrade, and Archerfield Airport.
Quintessential Equity has been a net seller in the past three years, divesting $314 million worth of assets and purchasing $160 million.
Quintessential Equity’s first fund raised $113 million in April of 2018 and acquired commercial buildings at 431 King William St in Adelaide and 8 St Georges Tce in Perth, and an industrial estate in Port Adelaide.
