APIL Reaches $1.0Billion Property Fund Milestone
Perth-based Australasian Property Investments Limited is sizing up opportunities in the industrial market, launching a new syndicate targeting $125 million worth of properties.
You often hear of major Australian Property Funds thrown around when it comes to striking promising property deals, but there’s another player looking to make its mark.
It’s been almost 20 years since Australasian Property Investments Limited (APIL) made its debut in the local property scene with the purchase of a retail premises in Midland and an office building on Kings Park Road.
At that time, in 2001 APIL’s then two-property portfolio was valued at about $10 million - in 2019 the value of APIL’s past and present management portfolio has reached above the ten-figure mark to hit the $1 billion investment milestone.
APIL managing director Peter Hughes said while the company’s portfolio had historically comprised of mostly retail and office buildings, it was now focused on building a profile in the industrial market with the launch of its 28th syndicate; the ‘APIL Industrial Fund No. 1’, targeting $125 million worth of industrial assets.
“Industrial property is currently the favoured property for fund acquisition,” Mr Hughes told Business News.
“A renewed demand for workshops and workspaces off the back of an uptick in resources projects, coupled with government infrastructure spending, has helped push down industrial vacancy rates in Perth to some of the lowest levels seen in three years.”
Pooling funds to play the market
Post resources slump and an ailing economy, green shoots have started to emerge in Perth’s industrial property market, with leasing and sales levels beginning to pick up over the past 12 months, according to the latest report from Savills.
“The industrial market presents a lot of potential, especially when it comes to investor security - a lot of the properties feature fixed long-term rent. With the Perth market bottoming, we thought the time was right to make a significant move,” Mr Hughes said.
APIL’s new industrial fund has already made its first two acquisitions; 150 Quill Way in Henderson, Western Australia and 5-17 Taminga Street, Regency Park, South Australia. Both of the large industrial land holdings are leased to prominent national tenants on long lease terms with a WALE, by income, of just over 16 years.
Mr Hughes anticipated the fund would acquire multiple industrial properties across Australia by June 2020.
“We’re purposely looking for properties located in prime business precincts that provide stronger tenant demand to minimise vacancy risk,” he said.
“The reason we established this multi-property fund was to mitigate exposure to vacancy, which is always seen as a risk with single tenanted properties.”
The fund’s first acquisition, 150 Quill Way in Henderson, WA, houses Matrix Composites and Engineering under a current 20-year lease term (expiring in 2039).
Henderson is also home to the Australian Marine Complex, and forms a core part of the state government’s defence strategy as a hub for national naval shipbuilding and sustainment.
“We’re aiming to acquire multiple industrial properties with high tenant appeal across several Australian capital cities,” Mr Hughes said.
“This way we can provide investors with market and geographic diversity, which is what has largely underpinned the success of our entire portfolio over the years.”
Diversification key to long-term gain
Mr Hughes said while others looked to play the highs and lows of property cycles, APIL’s long-term success had come down to knowing the market and handpicking a team of the best in the industry.
“You can’t sit around hoping to ‘get lucky’, or rush to buy up as much as you can like the start of a game of Monopoly,” he said.
“I’ve have been in the property industry for 42 years and I’ve watched the cycles come and go. Rather than quick wins, our strategy has been underpinned by knowing the local market and diversifying our portfolio.”
As of 30 June 2019, of eight completed APIL investment syndicates (sold and wound up) the average cash distribution was 11.8 per cent per annum, with the average capital returned to investors on initial equity of around 230 per cent after being held for an average term of approximately 8 years.
“Since APIL’s inception in 2001 our total return to investors of 29% per annum on completed syndicates is impressive when compared to other investment options such as the All Ordinaries which returned 9.4% per annum over the same period of time.”
APIL’s portfolio consists of mostly WA-based assets, with prominent properties including Floreat Forum Shopping Centre, Flinders Square, Joondalup Gate and a CBD office located at 30 The Esplanade Perth.
The business has also ventured beyond WA and made some of its most successful deals, including an office in St Leonards in Sydney, which APIL purchased for $94million, only to sell it for $166 million just 3 ½ years later.
Mr Hughes said while the retail and office market would still play an important part in APIL’s future, he hoped the new industrial fund would become an important investment for the business into its next 20 years.
“From the very beginning, the vision has been to offer clients direct commercial property investments featuring strong yields and the potential for capital growth over the medium to long term,” he said.
“We’ve never wanted to put all our eggs in one basket and the results continue to speak for themselves.”