The property is a two storey building over 2,563 square metres with 100 car parking spaces.  Its anchor tenant is Sonic Healthcare who uses the building as a pathology laboratory.

Its location is close to a number of hospitals such as the Calvary Wakefield Private Hospital, Sportsmed SA Private Hospital and Parkwynd Private Hospital, and Fullarton Road is characterised by a number of medical related businesses.

Chris Smith, head of healthcare and retirement property at Australian Unity Real Estate Investment, says that the acquisition will enhance the geographic, property type and tenant income diversification of the HPT.

“HPT has performed extremely well for investors, delivering returns of 10.08 per cent over one year, 8.48 per cent  over three years, and 11.33 per cent  since inception^*.

“We continue to search for high-quality properties to acquire for the HPT to  deliver the best possible returns for investors.

“Consistently strong investor support has provided the HPT with significant capacity to fund its development pipeline and to make further selective acquisitions of quality assets such as this” Mr Smith said.

The purchase of the building in Kent Town follows the acquisition of a building in Townsville, Queensland, which AUREI, in partnership with Healthe Care, intends to convert into a mental health hospital.  It also purchased Brisbane Waters Private Hospital on the Central Coast of New South Wales in July this year for $16.18 million.

——-

^{*Returns are as at 30 September 2014 for wholesale units in the Healthcare Property Trust, the inception date for the wholesale units is 28 February 2002.  Returns are calculated after fees and expenses and assume the reinvestment of distributions.  Past performance is not a reliable indicator of future performance.  In deciding whether to acquire, hold or dispose of the product you should obtain a copy of the current product disclosure statement dated 30 September 2014 and consider whether the product is appropriate for you.  A copy of the PDS is available at australianunityinvestments.com.au or by calling investor services on 13 29 39.}

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The property will be developed by the Gibb Group, who will construct a generic 6,994 square metre logistics facility within the Gracemere Industry Park that will incorporate administration offices and a high clearance warehouse, together with extensive concrete paved driveways and truck manoeuvring/marshalling areas. The facility will be purpose-built for leading road transport provider Toll NQX, part of the listed Toll Holdings (Toll Group), which has committed to a 12 year lease with two, five year options and fixed rental increases of 3.75% per annum. Construction is commencing in November 2013 with completion scheduled for April 2014.

Charter Hall’s Head of Direct Property, Richard Stacker, said the acquisition marks the fifth asset to be added to DIF2’s industrial portfolio with a sixth asset acquisition close to being agreed.

“We have received strong investor interest in DIF2, with the fund recently closing oversubscribed a year ahead of its target closing date, and have the capacity grow this portfolio to approximately $200 million.

“The acquisition of the Toll NQX facility is a great fit for DIF2 given the new 12 year lease to Toll and the property’s strategic location being 15 kilometres south west from the Rockhampton CBD with direct access to the new $50 million Gracemere Capricorn Highway overpass bridge. This allows the facility to service Queensland’s growing mining operations, with the Bowen, Surat and Galilee Basins all within a 400 kilometre radius, whilst Gladstone Port is only 110 kilometres away,” Mr Stacker added.

The acquisition increases DIF2’s current portfolio, settled and under due diligence, to $135 million and its weighted average lease term to 12 years. Other key tenants across the portfolio include Australia Post, Coles and OneSteel.

Charter Hall and its managed funds have made a number of investments in the Rockhampton region including Core Logistic Partnership’s recently acquired three hectare industrial site at Mackay which will house a new 13,763 square metre logistics facility pre-released to Blackwoods. Charter Hall Retail REIT also recently completed a $16 million refurbishment of its Allenstown Square shopping centre in Rockhampton.

“The Queensland market, and in particular the Rockhampton region, is an attractive area for Charter Hall and our managed funds, given the region’s link to the mining and agricultural industries and we are very pleased to be adding another quality property to the Group’s property portfolio,” Mr Stacker added.

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Houses up 4% year on year but dip for March quarter

According to the latest data from the Bendigo Bank/REIA Real Estate Market Facts report prepared by the Real Estate Institute of Australia, there has been a slight dip in the median house price across Australian capital cities for the March 2013 quarter.

Bendigo and Adelaide Bank’s Executive Retail, Dennis Bice, said “Despite the March quarter showing a slight decrease in the median house price of Australia’s capital cities, compared to the March quarter of 2012, the weighted average median house price has risen 4.0% in the past 12 months.  

“With the exception of Canberra, there has been median house price growth in all Australian capital cities.”

The weighted average median price for other dwellings for the eight capital cities was $434,601, a 0.9% drop, but compared to the March quarter of 2012, the weighted average median price for other dwellings for the eight capital cities increased 1.7%. 

“In terms of rentals nationally, median house rents increased over the March quarter across the capitals, with Perth and Canberra recording the highest increases of 4.4% and 4.3% respectively.  

“Rents for two bedroom other dwellings increased in Melbourne, Brisbane, Adelaide, Perth and Hobart while median other dwellings rents remained unchanged in Sydney and Canberra. Darwin recorded a 0.2% decline in rents for two bedroom other dwellings which probably reflects the increased supply of apartments coming online in the Top End’s capital.  

“Of course, there is no single real estate market in Australia, but these findings are a useful indicator as to where value can be found in different cities and in different market segments within those cities and the regions”, concluded Mr Bice 

Fast facts

• Quarterly Australian weighted average median house price is now $534,015
• Quarterly Australian weighted average median other dwellings price is $434,601                                           

Median house prices up

• Sydney 1.6% to $673,681
• Perth 1.0% to $505,000
• Darwin 2.4% to $592,000  ( up by 7.6% for the year)

Median house prices down

• Melbourne 0.9% to $545,000
• Brisbane 2.3% to $430,000
• Adelaide 1.3% to $395,000
• Hobart 1.4% to $360,000
• Canberra 8.7% to $482,500

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FIRPTA is a US tax levied on foreign persons when they dispose of real property interests.

Russell recommends superannuation investors construct broad multi-asset portfolios designed to meet their specific investment objectives. Alternative investments, including direct property and infrastructure, locally and overseas, are important components of this multi-asset approach.

“Russell’s own multi-asset portfolios are continually evolving to take advantage of new investment opportunities as they arise,” said Andrew Sneddon, Managing Director and Portfolio Manager, Multi-Asset Solutions.

“The potential abolition of FIRPTA tax prima facie makes future investments in US real estate more attractive and we are currently looking to enhance our range of multi-asset portfolios with allocations to direct property and infrastructure in the US as well as Europe and Asia,” said Mr Sneddon.

Samantha Steele, Senior Research Analyst, Alternative Investments said, “While Australian institutional investors have long discussed the need to capture global property opportunities, it seems this tax announcement may be the tipping point which will see a more definite move offshore for many funds.

“US direct property and infrastructure provide attractive opportunities for Australian super funds as part of their global real estate / infrastructure portfolios. The increasing scale of Australian funds means they are looking offshore,” said Ms Steele.

In addition to revising its own multi-asset portfolios, Russell recommends funds update their asset allocation models to highlight the increased attractiveness of US direct property and infrastructure relative to other asset classes, if the reforms become law.

Traditionally many super funds have shunned this investment opportunity because the US tax cost is too large. FIRPTA can erode 35-40% of the investment income and is not refundable to the Australian super investor. This is far higher than the maximum 15% tax that Australian super funds face.

In Australia, Russell can advise Australian investors on offshore real estate / alternative investment through its ready access to the global team’s experience and insights, to assess whether and which US property and infrastructure investments are appropriate for its multi-asset portfolios.

Ms Steele said super funds looking for investment opportunities in alternatives should now consider the increased attractiveness of US property and infrastructure in after-tax terms. Equally, super funds that have relegated this asset class to ‘no go’ status for tax reasons should now reconsider.

“Prime real estate in the US has recovered strongly since the global financial crisis and is close to pre-crisis pricing. That said the asset class still looks cheap on a relative basis when compared to historical yield spreads versus treasury and corporate bonds.

“While capital appreciation may be moderating, investors should still be able to achieve 7-9% total returns over the next few years, much of which will be income. Positive tailwinds for the asset class are substantial demand, a dearth of new construction, low interest rates and benign inflation,” Ms Steele said.

In late 2011 Russell released a report highlighting Australian investors were planning to increase their allocation to global non-listed property by as much as 34%. The groundbreaking research was conducted by Russell Investments, the Asian Association for Investors in non-listed Real Estate Vehicles Limited (ANREV) and the Australian Institute of Superannuation Trustees (AIST). Foreign tax drag was highlighted as a key deterrent for 43.6% of investors in the 2011 Survey, with many particularly cautious about the US.

“Australians are savvy property investors, and are clear-eyed about the opportunity to diversify their property holdings and bolster their offshore expertise. However there are still numerous challenges and super funds will need to negotiate this new territory prudently,” Ms Steele concluded.

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Mr Essey will be responsible for managing and coordinating the leasing of the Group’s office, industrial and retail assets in addition to providing strategic input into asset acquisition and disposal processes.

Jason Huljich, CEO of Centuria Property Funds said: “Andrew’s appointment is aligned with our strategic aim of building a more competitive business via the acquisition of larger, higher quality assets in major metro cities in Australia.”

“He has strong relationships with many of our external service providers which is a key component to the successful ongoing performance of the property portfolio. We are all confident that his knowledge and expertise will strengthen our relationships with existing clients and pave the way for new opportunities.”

Mr Essey joins Centuria from DTZ where he was a Director and was responsible for leasing and sales within Sydney’s North Shore industrial and office park markets for the past six years. During his tenure, he was directly involved in over 180 transactions while representing institutional and private investors. Prior to his tenure at DTZ, Mr Essey was a Senior Project Coordinator with The Atlantic Remodelling Corporation in the US.

Commenting on his appointment, Mr Essey said: “I am looking forward to working with the Centuria team and building on its portfolios. I was attracted to joining an organisation that has a strong history of performance and a clear strategic direction for the future.”

Centuria Capital recently announced the appointment of Nicholas Collishaw as CEO – Listed Property Funds as part of its implementation of a three level property strategy that includes retail funds, wholesale funds and listed funds to provide investors with access to a range of investment options matched to their mandate and risk profile.

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AMP Capital Shopping Centre Fund Manager Conrad Sinclair was pleased with the response to the capital raising launched in November 2012.

“We were very happy with the level of interest we have seen in the fund and the speed at which we secured funding from both domestic and international investors,” Mr Sinclair said.

“Despite softer retail conditions investors have recognised the very high quality of the portfolio and ability to add further value over the long term as well as AMP Capital’s ability to deliver these outcomes. Their investment allows them to participate in the growth of leading shopping centres with significant development opportunities.

In October 2012, AMP Capital announced a $390 million world class redevelopment of Macquarie Centre expanding the centre to 135,000 square metres gross leasable area with more than 375 speciality retailers. On completion Macquarie Centre will be the second largest shopping centre in Sydney and a top 10 centre in Australia.

The $200 million of new equity will assist in funding the redevelopment of Macquarie Centre in Sydney as well as Ocean Keys in Perth which has also now commenced a development in excess of $100 million. Both developments are planned to be completed in the last quarter of 2014.

The AMP Capital Shopping Centre Fund is a $2.3 billion sector specific shopping centre fund with exposure to 11 assets in five geographic sectors across Australia and New Zealand.

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More to property than residential

Investors, particularly self-managed super fund trustees, need to understand there is more to property than the residential sector, says Chris Smith, head of healthcare and retirement property at Australian Unity Investments.

“Generally speaking Australians are over-exposed to residential property, especially those that own an investment property as well as their home.
 
“Such investors are vulnerable in that they are overweight to residential property at the expense of other property sectors which are currently performing much better.”
 
Mr Smith said now is a good time to be investing in a broad-based property portfolio through careful selection of property funds.
 
“The current move from cash to equities, brought about by falling interest rates, shouldn’t bypass other asset classes that provide growth and income.
 
“A better re-balancing would be to include a selection of property sectors as well as equities for both growth and defensive reasons.”
 
For example, healthcare property has the sort of attributes long-term investors should find appealing, Mr Smith said
 
“As a sector, healthcare is currently producing excellent returns – 11 per cent annualised total return for the year ending December 2012 according to the latest IPD/PCA index -outperforming all other property sectors.
 
“Indeed, the healthcare sector has outperformed all other property on a one, three and five year basis, driven primarily by strong returns.
 
“The outlook for occupancy and new builds is also very strong, with demand for healthcare services expected to continue to increase from an increasingly older population and longer life expectancy.”
 
Mr Smith said that in recent years there has been a lot of attention given to the inability of the health system to cope with demand and successive governments’ under-investment in hospital infrastructure.
 
“As a result, there has been a recent burst of activity to build or rebuild medical infrastructure which is creating an additional need for support healthcare services such as consulting rooms and other specialist centres. Most of these operate at capacity as soon as they are built.
 
“Healthcare is a basic need and the demand must increase with an ageing and growing population.
 
“At one time, people didn’t survive a heart attack, or only had one hip replacement during their lifetime.  Now they survive a heart attack or have multiple hip replacements, and may need ongoing monitoring, post-operative rehabilitation, care and treatment for many years.
 
“Investment in the facilities that provide the increasing number of health services needed makes healthcare property a growth area, as well as a good defensive investment, and should have a place in any diversified property portfolio,” Mr Smith said.

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That was in the past. Now Aussie consumers are more cautious on going into debt, restraining demand for existing homes. Home prices were broadly flat in 2012 after falling 3.8 per cent in 2011 and rising 5.4 per cent in 2010.

But while Aussies are cautious on going into debt, population is still rising while home building has remained weak. So rents are still rising and so are investment returns on property. Property returns grew by around 4 per cent in 2012, just ahead of cash, but well short on the near 19 per cent growth of sharemarket returns.

CommSec expects that national home prices will rise around 3 per cent in 2012 with total returns up around 7 per cent. Aussies should grow more confident about taking out loans and buying real estate in 2013 although home building is also expected to grow in line with underlying demand.

What do the figures show?
The RP Data-Rismark Hedonic Australian Home Value index of capital city home prices fell by 0.3 per cent in December and was down by 1.2 per cent in the in the December quarter. Over 2012 home prices fell by 0.4 per cent.

In December, house prices fell by 0.1 per cent with apartment prices down by 1.1 per cent. Over 2012, house prices are down 0.5 per cent while apartment prices were up 0.5 per cent.

The average Australian capital city house price (median price based on settled sales over quarter) was $510,000 and the average unit price was $432,000.

Dwelling prices rose in four of the eight capital cities in December: Hobart (up 0.7 per cent), Melbourne (up 0.5 per cent), Perth (up 0.3 per cent) and Adelaide (up 0.1 per cent). Prices fell the most in Darwin (down 2.5 per cent), followed by Canberra and Sydney (both down 1.0 per cent) and Brisbane (down 0.3 per cent).

Home prices were higher than a year ago in three of the eight capital cities: Darwin (up 8.9 per cent), Sydney (up 1.5 per cent), Perth (up 0.8 per cent). Prices fell most in Melbourne (down 2.9 per cent) followed by Brisbane and Adelaide (both down 0.8 per cent), Canberra (down 0.3 per cent) and Hobart (down 0.1 per cent).

Total returns on capital city houses were up 3.7 per cent on a year earlier and units were up 5.6 per cent.

What is the importance of the economic data?
The RP Data-Rismark Hedonic Australian Home Value Index is based on Australia’s biggest property database (more than 312,000 sales during 2011). Unlike the ABS Index, which excludes terraces, semi-detached homes and apartments, the RP Data-Rismark Hedonic Index includes all properties. Home prices are an important driver of wealth and spending.

What are the implications for interest rates and investors?
With home prices flat, manufacturing contracting, inflation contained and the global economy still creating uncertainties, the Reserve Bank will lean in favour of providing more monetary stimulus. But we are close to an inflexion point. If US policymakers fundamentally deal with budget deficit and government debt issues, the outlook will become clearer and more positive. Australian consumers and businesses largely lack the confidence to embrace the opportunities that exist.

The outlook for the housing market is improving. Population is lifting but the supply of homes has not kept pace. So rental markets still generally remain tight with rents rising. Budding owner-occupiers of homes have largely sought to utilise existing housing stock (shared rental; young people living at home with parents for a longer period) than buy or build homes. If confidence improves as we expect in 2013, demand for new and existing properties will rise.

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AMP Capital Managing Director Office and Industrial Property Louise Mason said the approved concept plan will feature a world class residential building and luxury serviced apartment accommodation.

“This $300 million project will revitalise an important part of Circular Quay, significantly improving this landmark Sydney space for residents and visitors alike,” Ms Mason said.

“The development of 71-79 Macquarie Street will realise the original vision for the East Circular Quay precinct by completing the colonnade that extends along East Circular Quay from the Opera House.”

The plan for the development includes:

• Extending the popular harbour-front colonnade right along East Circular Quay
• Creating a new pedestrian walkway from Circular Quay to the Royal Botanic Gardens and Macquarie Street
• Giving priority to pedestrians by removing vehicle traffic from the East Circular Quay promenade
• Opening spaces for new shops and restaurants at ground level.

The proposed 19-level building will be the same height as the current building (67 metres) on a land area of 1,200  square metres. This together with sensitive design features including tapering the corner of the building will protect views for neighbours.

A national design excellence competition to be conducted by the City of Sydney will ensure the project achieves design excellence and reflects the best in architecture, urban design, sustainability and renewed public space.

Five of Australia’s leading architectural firms have been selected to take part in the competition.

“This is the first step in an extensive design and planning process with the City of Sydney, during which we will consult neighbours and other stakeholders on aspects of the project. We want a world class building that enhances the public’s enjoyment of the area,” she said.

AMP Capital and Mirvac have worked closely with the NSW Government and City of Sydney to fulfil the original vision for Circular Quay.

Discussions were also held with residents and tenants of neighbouring apartment buildings in the preparation of the concept plan.

“As a long term resident of Circular Quay, AMP Capital believes projects like 71 Macquarie can provide a catalyst for revitalising the entire precinct and we look forward to a continuing dialogue with the NSW Government, the City of Sydney and the community of Circular Quay on this important project,” Ms Mason said.

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“Advisers have told us that listed property is a cornerstone of their client’s defensive portfolios.” says Mulligan. “We’re delighted that Zenith has formally recognised MBA’s track record and expertise in this asset class with a rating of Recommended.”

Maple-Brown Abbott’s Listed Property Fund capability is managed by Charles Dalziell and Dougal Maple-Brown utilising MBA’s time-proven value-driven, team approach to identify stocks representing strong relative value. However, this capability has never before been available to the retail market.

Tim Hordern, Head of Business Development for Maple-Brown Abbott said, “We are delighted to be offering our listed property capability in the retail market through All Star Funds, and have selected them for their expertise and reach in that market.”

All Star Funds, which was established in July 2007, was conceived to provide high alpha capabilities which would otherwise not be available to the retail market.

“For the past three years we have focussed on getting our “core” funds settled. This new capability has been designed to meet the demands of advisers for a reliable, conservatively managed LPT” said Mulligan. She continued, “We understand from our conversations with advisers that there is a real need for additional solutions in this space.”

Mulligan believes the new capability will complement All Star’s existing Funds, the All Star IAM Australian Share Fund (managed by Independent Asset Management), the All Star KFM Income Fund (managed by Kaplan Funds Management, an absolute return manager focussed on income producing strategies) and the latest Fund to join the All Star ranks, the All Star Nomura China Fund (managed by Nomura Asset Management, a conservative manager with proven expertise in this market).

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