Qube invests in industrial

Qube Property Group has acquired two industrial properties within the Tonkin Highway Industrial Estate in Bayswater for $11.4 million.

Both properties are secured by long-term leases to global tenants with fixed annual increases, providing a combined weighted average lease expiry (WALE) of approximately nine years. 

The asset at 1 Inner Court comprises 3,493 square metres of floorspace, including a two-level office, as well as a workshop/warehouse with two 30-tonne gantry cranes. 

The Inner Court property is leased to Flender Australia, which specialises in gear units and industrial couplines. 

Qube’s second acquisition, a 1,400sqm property at 31 Radius Loop, is leased to Mediatec - Nep Live Events, an international production company providing teleproduction and broadcast services. 

Traditionally a property developer, Qube made its first investment into existing tenanted properties in 2019, with the purchase of a large format retail premises in Malaga anchored by a JB Hi-Fi. 

Qube director of capital Geoff Davieson said the success of that deal had laid the foundations of investor appetite for the group’s recent Baywaster acquisitions. 

“Our goal for the income asset division is to secure stable recurring income for qualified investors and self-managed super funds without the responsibilities and headaches of direct property ownership,” Mr Davieson said.

“There is a real demand across our investor base for commencing yields starting from 7 per cent, though a strong tenant covenant and long WALE are naturally key prerequisites. 

“Our Bayswater warehouses offer was oversubscribed within the first few days.”

The latest acquisitions add to Qube’s portfolio of 50,000 square metres of commercial office and retail space. 

Qube is also an active developer in the residential property space, with 19 apartment and townhouse developments to date, as well as land estates holdings with yield of 7,500 lots. 

“The move to the acquisition of existing commercial assets has been a function of the low interest rate environment we find ourselves in,” Mr Davieson said. 

“It delivers diversification from QUBE’s traditional development business by providing attractive risk-adjusted returns in this historically low interest rate environment. 

“When acquiring these assets, we are targeting covenant strength and year-one investor returns in the range of 7 to 8 per cent on equity.”

Mr Davieson said the state’s industrial asset class was well-positioned, given the growth in online shopping driving the need for warehouses, as well as government support for manufacturing on the horizon and the need for more space to accommodate social distancing measures for many businesses. 

Industrial properties are top of mind for investors, according to a recent CBRE survey, with the industrial and logistics property market the only Australian sector to record an increase in sales volumes (up 13 per cent) in 2020.