11/02/2020 - 10:01

Post-IPO Primewest diversifies

11/02/2020 - 10:01


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Primewest is diversifying its portfolio into agricultural assets, fresh from announcing it would spin-out five office properties in Perth and Brisbane into a new ASX-listed trust.

Post-IPO Primewest diversifies
David Schwartz has a bullish outlook on Perth property, from commercial through to residential. Photo: Gabriel Oliveira

Primewest is diversifying its portfolio into agricultural assets, fresh from announcing it would spin-out five office properties in Perth and Brisbane into a new ASX-listed trust.

Director David Schwartz told Business News Primewest was doing due diligence on two agricultural properties: a vineyard in the South West and an irrigation property near Albury-Wodonga, which sits astride Murray River on the NSW-Victoria border.

“We think it’s a nice space, it’s a space we are looking at where we are very clear that it’s just land or tenant,” Mr Schwartz said.

“We are not getting into the agribusiness itself; we are looking for properties that have got water, that are tenanted with long-term tenants and will make a good return.”

Mr Schwartz said Primewest’s board of directors collectively saw significant potential for capital gains in agricultural assets, on the back of the growing global population and momentum building in the shift towards plant-based foods.

He said the diversification of Primewest’s portfolio, and the launch of a new commercial real estate investment trust, was a continuation of business as usual for the company, after its ASX listing last year.

The assets to be spun-out into the new trust, collectively valued at around $285 million, comprise 251 and 267 St Georges Terrace and 226 Adelaide Terrace in Perth, Super Retail Group’s Brisbane headquarters in Strathpine and 130 Commercial Road, also in Brisbane.

“There are unsolicited enquiries that would indicate it would be well received in the market,” Mr Schwartz said.

He said Primewest would also continue to pursue new development opportunities, with current projects on its books including a neighbourhood shopping centre in Ellenbrook, some large format retail, and an industrial plot in Forrestdale.

Mr Schwartz said Primewest was also actively seeking outside opportunities to grow its business.

“There are just heaps of opportunities that are being presented to us at the moment,” he said.

“All of a sudden by having cash on the balance sheet it’s a totally different story. The opportunities are coming thick and fast.

“We are also still actively looking for possible bolt-on acquisitions, where we would acquire smaller syndicators and incorporate them back into the business here.”

While Mr Schwartz said most of the acquisition opportunities it was pursuing were on Australia’s eastern seaboard, Primewest would remain headquartered in Western Australia.

He also offered a bullish outlook for Perth property, with the commercial office sector in particular experiencing a significant uptick in activity.

“I think we’ve seen five slow years, I think we’re out of it; population growth is starting to pick up and we have seen far more activity in the market than we’ve seen in a long time,” Mr Schwartz said.

“Two of the A-grade buildings we own are just about full, and we just see that spreading through the rest of the market. So we are pretty confident that things have turned.”

Mr Schwartz said a wider recovery was beginning in the residential sector, where Primewest is an equal shareholder in LWP Property Group.

“We are not seeing price movement just yet but I think you are going to start finding that those deep discounts people have been providing are going to stop and that overhang in the market will go, and all of a sudden the world changes for that whole sector again,” he said.


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