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Good morning,

Firstly, from our family, we hope that you, your families and teams are all well.

Who could have foreseen what has taken place around the world over the past 2 months. We take enormous heart in the stories of people and businesses coming together to ensure that we all emerge stronger on the other side.

We are pleased to announce that over the past month we have completed over $140,000,000 in settlements across a CBD shopping centre, neighbourhood shopping centre and a family resort hotel to 3 different Buyer categories, (Hong Kong Investor, Australian Institution and Australian Private Investor). Information on these deals are at the bottom of this email or can be viewed HERE. Please get in touch to receive the respective sales analysis.

We have an additional $880m of properties in exclusive due diligence across three Australian States and New Zealand. This ensures that we have a real time understanding of current market movements and considerations.

The MRE team are all actively working remotely and in the past 2 weeks have spoken with over 200 key decision makers that will shape the course of our industry over the coming months – it has been fascinating to observe the various approaches being adopted.

The key themes we are seeing include:

  Quality assets will always have a market.

  There has been an immediate increase in enquiry from offshore investors keen to take advantage of the low Australian Dollar. In the short term this may be offset by the recent changes to FIRB, mostly related to timing of approval, however we see the majority of deals, outside of the expected M&A activity, occurring to offshore Buyers who have historically not been able to compete because they require more time than local groups.

  Many tenants are being opportunistic, however proactive Landlord’s are strengthening relationships during this period.

  Banks will need to take a rational and longer term view in relation to Interest Coverage Ratio Covenants.

  Unlike 2008/2009 there remains liquidity in the debt markets, the cost of which is at record lows.

  Government Stimulus has been well placed and well received. There will be more to come.

  The cost of this stimulus, although cheap given current bond rates, will push inflation higher. Real Estate is a terrific hedge against inflation.

  There will be a significant, short term spike in unemployment, however, looking at post SAR’s data in 2003 and recent numbers from retailers in China, the pent up demand will create a surge in spending.

As always, we are available at any time to discuss any aspect of the market and happy to catch up over a virtual coffee (or wine!).

Stay healthy.

Sam and Dan

Circle on Cavill
Circle on Cavill

Type:  CBD Retail

Price:  $61,800,000

Initial Passing Yield:  7.6%

Vendor:  EG Funds Management

Purchaser:  Loi Family

Commentary:  Circle on Cavill is a convenience and dining based mixed use asset, located in the heart of Surfers Paradise. It features 12,586 sqm over 3 levels and carparking for 419 vehicles.

It is the 3rd time we have sold this property.

Paradise Resort
Paradise Resort

Type:  Family Resort Hotel

Price:  $43,000,000

Initial Yield (based on FY19 actuals):  3.75%

Vendor:  Receiver for the Ralan Corporation

Purchaser:  Schwartz Family Co Pty Ltd

Commentary:  Paradise Resort is an established 360 room family resort, with approval for the development of 1,432 residential units on the site. Considerable interest was generated from developers and hotel investors alike, resulting in a total of 7 strong bids originating from Singapore, Hong Kong, United States, New Zealand and Australia. The successful purchaser will be investing further into the existing hotel to enhance the offering.

This is the 3rd time we have sold this property.

19th Avenue Shopping Centre
19th Avenue Shopping Centre

Type:  Neighbourhood Shopping Centre

Price:  $35,250,000

Initial Yield:  5.60%

Vendor:  Private Investor

Purchaser:  ISPT (IRAPT Fund)

Commentary:  19th Avenue Shopping Centre is a neighbourhood shopping centre, anchored by a strong performing, long tenure Woolworths.

This is the 2nd time we have sold this property.

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