18/05/2021 - 08:00

Quadrant diversifies with office buy

18/05/2021 - 08:00

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Perth-based property funds management company Quadrant Investments has acquired an office building in Midland for $7.25 million as part of its new investment trust.

Quadrant diversifies with office buy
Savills Australia brokered the $7.25 million sale, reflecting an initial yield of 5.78 per cent and a 6.25 per cent reversionary yield on market rent. Photo: Savills Australia

Perth-based property funds management company Quadrant Investments has acquired an office building in Midland for $7.25 million as part of its new investment trust.

The two-storey office building is located on the corner of Keane Street and Great Eastern Highway in Midland, comprising a net lettable area of 1,367 square metres.

The Midland property is the inaugural acquisition for Quadrant under its QI Diversified Income Trust No 1, which closed its first round of equity raising oversubscribed last month.

Quadrant established the trust with an aim to provide investors with a diversified portfolio of income streams, with the intention to add additional properties across various sectors and locations, targeting a combined value of up to $40 million.

Quadrant managing director Phillip Fogliani said the acquisition of the Midland office building provided the perfect foundation asset for the trust.

Quadrant was founded by Mr Fogliani in 2017, initially focused on targeting large format retail properties, with the company’s portfolio of assets under management growing to almost $60 million.

“The first acquisition provides this trust with a stable income from a reliable tenant in the WA government until July 2028, a highly prized attribute in the current landscape which has seen periods of uncertainty and continuing low returns below current inflation from bank term deposits,” Mr Fogliani said.

“The solid attributes of 2 Keane Street, Midland provide us with an exceptional foundation for the trust that we can build on with future acquisitions.

“The reasons for acquiring the property were compelling on its obvious fundamentals, but perhaps one of the most important and valuable reasons we saw was the strong prospects for future rental growth.

“Our assessment of the economic rent required to justify the construction of a new building of comparable quality in the Midland city centre, including matching its exceptional one per forty-one square metre car parking ratio, is significantly higher than the current passing rent, which will not only improve the prospect for rent growth upside but also in retaining the existing tenant.”

The Midland property was marketed via a campaign managed by Savills associate director Barney Dear, who said the asset received significant interest, generating more than 115 enquiries.

Mr Dear said the $7.25 million sale reflected an initial yield of 5.78 per cent and a 6.25 per cent reversionary yield on market rent.

“We’ve certainly seen high demand for premium assets with long leases to A-grade tenants such as 2 Keane Street, Midland,” Mr Dear said.

“This asset not only delivers an A-grade tenant in the WA State Government until July 2028, but also delivers a strategic central location within the Midland city centre – a locality that has benefited already from almost $1.5 billion worth of investment from the Government and private sector, with more to come.”

Mr Fogliani said Quadrant was eager to secure the next asset for its diversified trust.

“A number of the current first round investors in the trust have already indicated their wish to increase their investment and we are also taking registrations of interest from investors, including those who missed out, for our planned second raising,” he said.

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