Irongate has acquired a site at 34 Southgate Avenue, Cannon Hill QLD and entered into fund through agreement with Anthony John Group to deliver a commercial building for Michael Hill Jewellers.
The total purchase consideration is $36,000,000 which represents an initial yield of 5.0%.
Cannon Hill is just 6km from Brisbane’s CBD and enjoys good access to the Gateway Motorway, established train and bus networks and nearby major shopping facilities. Major tenants attracted to the Park include Canon, Westpac, Honeywell, Holden, Orica, 4BC Radio, and Bayer.
The Anthony Johns Group developed the adjoining 38 Southgate Ave, a 3,500sqm office building developed in 2013, now held by Trinity Funds Management.
Centuria and Elanor Investors are also active investors in the Corporate Park. Centuria hold 19 Corporate Drive which they acquired in June 2019 for $36.95m (6.8% yield) and Elanor hold 34 Corporate Drive which they acquired in September 2016 for $20.4 (8.3% yield).
The latest deal with Irongate involves a sale of the land for $3,897,000, with the balance to be progressively paid Anthony John Group under the development agreement.
Construction is due to complete in July 2022 and Irongate will earn a coupon of 5.0% on its funds employed during the construction period.
The purchase consideration and all transaction costs will be funded through Irongates existing debt facility.
Irongate CEO, Graeme Katz, said, “once completed, the building will comprise 3,520m² of lettable area with two levels of underground car parking, and will be occupied on a 10 year lease by ASX-listed Michael Hill, an international multi-channel retail jewellery chain with 285 stores across the globe. The building will be used by Michael Hill as its global head office and will also provide the tenant with manufacturing and distribution capabilities.”
“The acquisition aligns with IAP’s strategy of investing in well-located, high quality assets that provide a sustainable income stream for investors and will deliver IAP with a brand-new building with 10 years of income growing at 3% per annum. The acquisition continues our recent theme of acquiring assets in Brisbane, a market we believe currently offers relative value to both Sydney and Melbourne. Together with the industrial acquisitions in Brendale, Pinkenba, Kingston and Morningside, IAP has deployed close to $100 million over the past 6 months in Brisbane at an average yield of 5.5% with a weighted average lease term of more than 8 years,” Katz added.
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