Stirling Property Funds recently made its second fund acquisition, an office building located in Liverpool, in Sydney’s southwest.
The Stirling 203 Northumberland Street Fund (Fund) settled, on 30 September 2019, the acquisition of the office building located at 203-209 Northumberland Street, Liverpool. The quality B-grade eight storey 7,384 sqm office building also included an adjoining mixed used development site.
Stirling Property Funds said the unlisted Fund would benefit from Government infrastructure investment, and the future Western Sydney Airport located only 23km’s away.
Stirling Property Funds’ investment strategy focuses on commercial properties within key strategic markets, with strong occupier demand and low levels of vacancy which are well positioned to benefit from active asset management and infrastructure investment.
“The Liverpool region stood out as one of these markets given the scale of infrastructure investment in the LGA and the strong population and local GDP growth. It has a very well-established health and education precinct which draws a significant number of people into the city each day, generating strong local commerce” said Stirling Property Funds.
The Fund was attractive to investors. It was over-subscribed and offered a total return of more than 12% per annum.
Stirling Property Funds directors co-invested $1m and raised a further $26.4m from investors. These funds were used, along with bank debt, to fund the $46.8 million Liverpool office building acquisition.
The unlisted Fund is targeting average net cash distributions of 5.4% per annum over a four-year term.
Stirling Property Funds will use its asset management skills to improve the amenity of the building including upgrading of the lifts and air conditioning for existing tenants as well as new occupants.
“With an existing low vacancy in Liverpool CBD, along with current rents within the building being approximately 13% below Grade B market rents and 60% below Grade A market rents, the commercial office building is well positioned to achieve rental growth over the next few years. The building is 82% occupied, with a rental guarantee covering the vacant space during the first six months, and a weighted average lease expiry of 3.6 years and is currently leased to 10 tenants” said Stirling Property Funds.
With the purchase price equating to $5,431 per square metres for the office building, Stirling Property Funds’ defined investment strategy aims to reposition the building, lease up current vacancies, deliver higher average rents and increase the building value over the Fund’s life.
The adjoining development site has a development application which is currently under assessment by Liverpool Council for a mixed-use building with 66 apartments and commercial office accommodation.
In 2018, Stirling Property Funds bought its first property at 2 Byfield Street in Macquarie Park for just over $15m.
Stirling Property Funds was formed in early 2018. It has brought together residential property group Legacy Property, headed by Matthew Hyder, with former Bankminster Properties and Centuria Capital Limited property fund managers, including Matthew Coy and David Govey as well as former M&G Real Estate CEO and Chief Investment Officer for Asia Pacific, Scott Girard who brings more than 21 years’ experience across fund management, capital markets and corporate finance to the role.
Stirling Property Fund’s Directors include, Mr Hyder CEO, Mr Coy, the company’s COO, Mr Girard Head of Property and Mr Govey as non-executive Director.
Andrew Mutton is a second non-executive and Stirling’s Chair. He brings more than 20 years’ experience in financial services licensing, funds management, compliance and fundraising to the company.