QE INVESTMENT NEWS – May 2019
At Quintessential Equity we are driven by results and believe in a dynamic, yet risk-mitigated approach over the full term of investment. We have created an enviable track record of providing investors with industry-leading weighted average net internal rate of return of 23.4% per annum and 91.7% weighted average net total return (by sale prices/values at 30 June 2018). This is underpinned by our tenant retention rate since commencement of 95.1% as at 30 June 2018.
These results are a culmination of our dedication, hard-work and expertise. Please see some of our recent highlights below.
1. Quintessential Equity Master Fund (Master Fund) – Property acquisitions
Based upon our foresight of the tightening local bank-debt market, we established our Master Fund in April 2018. The Master Fund was structured to operate on a ‘commitment’ basis to ensure that we are ‘capital-ready’ to take advantage of qualifying opportunities on behalf of our investors.
By the end of 2018 we had successfully purchased our first two Master Fund properties (431 King William Street, Adelaide and 8 St Georges Terrace, Perth.) We are excited to report that we are currently in exclusive due diligence on a third property in Port Adelaide, South Australia for the Master Fund.
Should the Port Adelaide acquisition meet our due diligence requirements and we proceed to acquire it, we will have called essentially all of the remaining committed capital of the Master Fund. This will be a strong result as we will have sourced and acquired three properties at a cost of approximately $132m, all within 14 months from the Master Fund’s establishment. This is well within the prescribed two year property acquisition period
2. Launch of Master Fund No. 2
Subject to contracts being exchanged for the Port Adelaide property in the Master Fund, we are excited to announce that we intend to launch Master Fund No. 2 mid-2019. Master Fund No.2 will similarly take advantage of the buying opportunities that we believe will continue to present themselves in the current market.
In Master Fund No.2, we will keep to our proven investment property fundamentals and acquire properties that provide the opportunity to be repositioned so as to produce long-term secure income to investors.
Please register your interest in Master Fund No.2 by clicking here.
3. Sale of 14 Moore Street, Canberra
In December 2018 we successfully sold 14 Moore Street for $59.0m resulting in a net internal rate of return of approximately 24% to investors and a net total return to investors of approximately 160%.
The property was purchased in June 2014 with only a 19% occupancy. Through direct involvement in the leasing process, together with intense and active management, we were able to attract and retain quality long-term tenants to the building providing long-term secure income. Accordingly, we were able to present to the market a fully refurbished building with quality tenants and a 4.5 year WALE –a highly sought after investment opportunity in today’s market.
4. QE Leasing activity
At Quintessential Equity we regard our tenants as our clients. We take a hands-on approach to both the relationships with the tenants and the properties that they occupy. We are committed to providing high-levels of client service, integrity and excellence. Our ability to deliver exceptional end-to-end and stress-free property services to tenants at every stage coupled with our ‘love the tenant’ philosophy underpins our impressive 95.1% tenant retention rate.
Some of our recent leasing activity includes:
39 Brisbane Ave, Barton
Earlier this month we received the signed lease from BAE Systems Australia, a large defence IT and infrastructure security firm, for the building’s last remaining vacancy. The lease, which commences on 1st May 2019, is for a period of ten years with a further five year option- far exceeding our conservative projection of a five year lease. Further, the rental rate per square metre of this lease was almost 5% higher than projected. This brings the building to 100% occupancy with a WALE by income of 5.42 years as of March 2019.
8 Gardner Close, Milton
This property was purchased on August 2017 with a 21.8% occupancy rate. Through our direct involvement in the leasing, including managing the tenant fit-outs, we were able to provide a turn-key solution to tenants. Our marketing strategy and high-value offering was attractive to a number of Brisbane CBD tenants.
We are proud to report that by November 2018, 15 months from acquisition and well within our two year projected let-up time, we managed to fully lease the entire building with a WALE of 5.3 years. This is particularly impressive given the difficult leasing conditions in the area.
5. QE Sustainability
We recognise that we can make a difference by reducing our environmental footprint. We improve the environmental performance of our buildings by adopting an efficient and holistic approach in refurbishments and construction, operations and maintenance.
See some of our recent sustainability achievements:
10 Moore Street, Canberra
After 12 months of continuous ‘monitoring and validation’ of the building’s operations, we are pleased to announce that we have successfully attained a NABERS Base Building Energy rating of 5 Stars for 10 Moore Street. This is a significant result given the extent of the upgrade works undertaken.
1 Malop Street, Geelong
Our Malop Street building continues to track over 5 Stars in its NABERS Base Building Energy rating and is anticipated to achieve 5.5 Stars over the coming quarter. We are currently managing the operational fine tuning of the building to reduce energy consumption with Aurecon and Swinburne University.
39 Brisbane Avenue, Milton
At the end of the first quarter of 2019, following the tuning and commissioning phase, the building was tracking its NABERS Base Building Energy rating at 4.28 Stars. Once the building becomes fully occupied, we anticipate the target of 4.5 Stars rating being achieved.