161
%
Total Return (Net of Equity Invested)
52.05
%
Uplift in Portfolio Value
13.2
%
IRR (Internal Rate of Return)
Overview
In 2019, WA was experiencing the grassroots of rising activity across the mining, oil and gas sectors following a series of new investments from some of the State’s leading energy giants. Our internal research identified that this influx of investment would drive a cyclical upswing in the north-west residential housing market, underpinned by the growing workforce required to service these projects as well as lack of supply following a prolonged market downturn.
In December 2019, we established the Pilbara Growth and Income Fund, which set out to acquire up to $10 million worth of residential properties across key mining towns in the Pilbara region. The objective of the Fund was to deliver regular distributions to investors through the rental income of these properties, while timing entry into the market to capture the projected uplift in rental and property values.
Fund Timeline
Between late 2019 and early 2020, Westbridge purchased 27 established properties across the key mining towns of South Hedland, Port Hedland and Karratha totalling $8.8 million.
These properties comprised a mixture of 3 x 1, 3 x 2 and 4 x 2 established housing, carefully selected to align with local market demand (predominantly from the mining workforce), and with a focus on minimal maintenance to maximise income potential.
Over the course of the following years, the Pilbara region benefited from a significant strengthening in market conditions, with median rents increasing 115.6% in the five years to July 2024 off the back of the high demand, low supply dynamic (REIWA). This was reflected across many of the properties across the Fund’s portfolio, some of which doubled in rental income over the holding period.
Outcome
In mid-2023, we began selling down the Fund’s assets, with our research suggesting an opportune time for divestment based on the balance of strong market conditions but slowing growth rates as property values started to approach replacement cost.
On divestment of the final property in July 2024, the Fund’s portfolio had realised a capital uplift of 52% in value from the initial purchase cost of the properties. Factoring in income distributions and capital appreciation, investors in the Fund received a total return of 161% over the 58-month period, equating to an internal rate of return of 13.2% after all fees and costs*.
*Past performance is not a reliable indicator of futre performance. Performance comparisons are provided purely for information purposes only and should not be relied upon. Westbridge Property Securities Ltd ABN 28 091 623 862. AFS Licence 238386.
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