This article is from the Australian Property Journal archive
PROPERTY funds manager MPG Funds Management has acquired a western Melbourne office building occupied by the Victorian government for $14.3 million, as investor appetite for essential service properties continues to grow.
Purchased on a yield of 6.25%, the newly constructed strata office building in Sunshine has part of the ground floor and first floor area of 2,127 sqm leased to the Victorian government’s The Orange Door on an eight-year term.
The Orange Door is offered by the state government as an easy way for people experiencing or who have experienced family violence to access support, either face-to-face, or via telephone or email
Sunshine is pencilled in to play a major role in the proposed rail link to the Melbourne Airport.
The Orange Door property, at 15-19 Service Street and Dawson Street, was purchased for the unlisted MPG Essential Services Property Trust, which has grown to include $230 million of essential service and social infrastructure properties.
MPG managing director, Brett Gorman said, “Despite some interest rate uncertainty, MPG will continue to seek to purchase quality properties with strong fundamentals such as this Sunshine property in the range of $5 million to $35 million to continue the growth of the Trust.”
Marc Leiba of Leiba Commercial, who negotiated the deal, said, “Government-anchored properties on long-term leases are proving to be a very popular asset class with investors due to the security associated with the lease and quality of the buildings the tenant occupies.
“This particular property being brand-new had the added benefit to the purchaser of having significant depreciation benefits on offer as well as being located in a metropolitan location of Melbourne, so it was a perfect fit for the buyer’s fund.”
Still in Melbourne’s west, but closer to the city, the Footscray building home to the Victorian government’s Department of Families, Fairness and Housing was put to the market with expectations of more than $37 million in May. It returns $2.4 million per year from a recently renewed five-year lease with no options.
