207
%
Total Return (Net of Equity Invested)
15.1
%
IRR (Internal Rate of Return per Annum)
*Past performance is not a reliable indicator of future performance
Fund Mandate
The Midland Central Property Trust was established by our team in 2012 for the $12.3 million purchase of Midland Central Shopping Centre.
The investment strategy was based on the exposure to a high-traffic neighbourhood Centre anchored by three strong national tenants in IGA, Optimal Pharmacy and Dan Murphy’s with a view to providing ongoing income and potential for capital growth over the longer-term.
Our initial analysis projected target distributions of 8.3% per annum and an internal rate of return per annum of 12%
Address
293-295 Great Eastern Highway, Midland WA
Building Area
3,220 sqm
Land Area
7,993 sqm
Tenants
IGA, Optimal Pharmacy, Dan Murphy’s
Maximising Income and Capital Potential
Throughout its opening three years, the underlying tenancies for the Fund provided investors with a strong blue-chip income stream to deliver distributions of 10.4% per annum.
As the Fund progressed, we saw several opportunities to enhance this potential further through capital works and leasing negotiations. These included:
Updating the façade on the Pharmacy to improve visual presentation and maximise foot traffic;
Resetting the lease with Optimal Pharmacy for a new ten-year term; and
Working with Dan Murphy’s on refurbishments to their store, in turn underpinning significant turnover growth and an uplift in rental income.
Outcome
With the end of the initial Fund term approaching in 2020, our team made the recommendation to investors for a further two-year extension to enable a resetting of the lease on the IGA tenancy.
Our proactive negotiations with the tenant resulted in the IGA exercising their lease option to extend the tenancy for a further ten-year term, ultimately underpinning an uplift in the Fund’s WALE and cementing a strong case for subsequent divestment. These plans were put into action in early 2023, with the following key outcomes:
The sale was secured at $19.3 million, representing a 56.5% increase on the asset’s initial purchase price.
Investors benefited from average income distributions of 11.7% per annum over the course of the Fund – significantly above the initial target of 8.3%.
Combined with the capital gain from the sale, investors realised a total return of 207% from the Fund, excluding their initial equity investment.
As a result of an initial $100,000 investment, investors realised $207,000 in distributions and capital gain over the 11-year period, exclusive of their initial investment.
*Past performance is not a reliable indicator of future performance
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