Newmark Property REIT strikes first deal since float
Newmark Property REIT has made its first acquisition since listing at the end of last year, a $57 million large format retail centre in suburban Brisbane.
Vendor Clarence Property sold the homemaker hub in Underwood on a yield of 5.15 per cent.
The acquisition takes the property trust’s portfolio value past $620 million and is the first retail asset not directly anchored by a Bunnings store, although it stands next to a Bunnings outlet.
Ed Cruickshank, fund manager for the property trust, known by its stock ticker as NPR, said the acquisition fitted neatly with the fund’s focus on exposure to high-quality real estate, targeting consistent and growing distributions.
“The property provides just that,” he told The Australian Financial Review.
“It is a significant landholding, 2.8 hectares. It is on the corner of two arterial roads and has a sizeable catchment. It is securely leased with a WALE [weighted average lease expiry] of 6.3 years.”
The retail centre comprises four buildings with a combined lettable area of 11,115 square metres. Its tenants include national retailers such asOfficeworks, Supercheap Auto and Sydney Tools. More than 80 per cent of the space is leased to medical uses and national retailers.
“In terms of its core elements this is exactly what NPR is trying to provide. We think it is going to be really strongly performing property for many years to come,” Mr Cruickshank said.
The transaction was negotiated off-market by CBRE’s Joe Tynan and Michael Hedge.
The Brisbane acquisition comes amid what is expected to be a broader disruption to the commercial property market as fund managers and investors reconsider pricing and returns required in the light or rising rates and inflation.
The acquisition will be funded through NPR’s existing debt facility and is expected to boost earnings immediately after settlement. Portfolio gearing will rise from 25.1 per cent to 36.5 per cent after the deal is completed.
“We are very conscious of the external factors which are driving debt and equity markets at this point in time,” Mr Cruickshank said.
“It is complex environment, but that’s why we are sticking to the fundamentals of a really high quality, land-rich portfolio underpinned by strong retailers.”
Mr Cruickshank said portfolio’s higher gearing would sit in the mid-point of its target range of 30 per cent to 40 per cent. NPR’s borrowings were hedged to 76.5 per cent earlier this year, while the Brisbane purchase will take that proportion of debt hedged down to around 53 per cent.
