This article is from the Australian Property Journal archive
BOUTIQUE property funds manager GDI Property Group's has launched a new office fund targeting high net worth and wholesale investors who have become disillusioned with the listed property sector.
GDI Property Group’s managing director Steve Gillard told Australian Property Journal the group has launched the GDI No. 29 GDI Office Fund which is looking to buy up to $100 million worth of assets across Australia.
The fund is looking to initially raise $35 million of equity and ultimately the fund is targeting $50 million in equity and with a targeted gearing of 50%.
Gillard said the fund is targeting specific markets where office vacancies are full and there is limited supply coming online. The fund is also looking at properties that have become available on the market as a result of the current credit squeeze.
Gillard said these markets include Perth CBD; Melbourne’s suburban offices; Adelaide CBD; regional Queensland; Hobart CBD and Sydney CBD.
The fund is not focusing on Melbourne CBD and Sydney’s suburban office markets, which Gillard believes there is an over supply.
Gillard said there are great buying opportunities emerging and GDI has recently secured two assets to seed the new fund.
The first property, 251 Adelaide Terrace was purchased for $35 million at a substantial discount to valuation of $41 million on June 23 2008. The property is let to 25 tenants and provides an initial net yield 10.6% pa.
The second asset is at 4-10 Jamieson Street, Cheltenham in Melbourne’s south east. Currently under due diligence, the $13 million purchase provides strong rental growth prospects as well as subdivision potential. The property provides an initial net yield 9.7% pa and was again purchased at well below replacement cost.
“If you are buying an undervalued asset, that is multi-let, high yielding and is below replacement costs, the risks are limited.
“We are targeting properties that have dual exit strategies by either one line sale or through a strata title sub-division process.
“These assets are attractively priced, high-yielding properties, located in property markets that GDI expects to continue to see strong growth well into the next economic cycle,” he added.
Gillard said feedback from the high net worth private and wholesale investors have been “fantastic”.
“There is still plenty of investors and capital around, these investors have recently been disillusioned by the listed property sector but the recognise GDI’s management of purchasing, refurbishing, strata sub-division, leasing and holding the properties until we can realise full value and sell,” he continued.
Gillard said he is very confident the initial fundraising will close on December 31 2008 or earlier.
Australian Property Journal
