M/Group buys Queensland shops for $36m

Diversified property company MGroup has expanded its portfolio into Queensland through the $36 million off-market acquisition of Pialba Place Shopping Centre in Hervey Bay.

Pialba Place is anchor tenanted by a Coles supermarket and a Big W department store, while the purchase price represents a yield of around 8 per cent on passing net income.

MGroup managing director Lloyd Clark said the asset, which sits on a landholding of 4.38 hectares, was identified for future development potential.

The shopping centre is the third such asset acquired by MGroup, following its acquisition of the Wodonga Plaza in Victoria for $43.5 million in 2017 and the purchase of Albany’s Chester Pass Mall, formerly known as the Albany Brooks Garden Shopping Centre, for $20 million, also in 2017.

“Our model is to acquire assets that provide strong income returns to our investors while implementing strategies that reposition the assets,” Mr Clark said.

“We first look to acquire assets with solid fundamentals and overriding lease covenants  that also offer value-add opportunities that can improve both the shopping experience and investment returns.”

He said the Chester Pass Mall was recently revalued at $5 million over its purchase price, while M/Group was currently formulating expansion plans.

Mr Clark said MGroup had also experienced leasing success at Wodonga Plaza, with its weighted average lease expiry (WALE) increasing from fewer than four years to more than six years.

MGroup director James Collis said the company had already identified opportunities to expand Pialba Place, while also ensuring it is fully leased.

“We take a very hands-on management approach to back filling and renegotiating tenancies for immediate gains,” he said.