Shift in strategy prompts Heathley portfolio sale

​Brisbane, 30 September 2015 – Heathley Asset Management is preparing to sell a portfolio of four office and industrial properties valued at circa $65 million as it increases its focus to health and medical assets.

The boutique fund manager has appointed CBRE to market the Brisbane and Melbourne properties, which are held within the Heathley Diversified Property Fund.

CBRE’s Peter Court and Ed Bull will steer the Expressions of Interest campaign, which is expected to generate significant interest from smaller listed funds, syndication groups and private investors.

The assets will be offered for sale individually or in one line, with the portfolio providing an exceptional blended Weighted Average Lease Expiry (WALE) of circa 6 years.

Three Brisbane properties are included in the portfolio, those being a boutique office building at 26 Commercial Road, Newstead, a recently completed office building in BTP Westlink Green office park, Darra, and a warehouse/distribution facility at 67 Bellrick Street, Acacia Ridge.

The fourth asset is a Melbourne warehouse/distribution facility at 96 Toll Drive, Altona North.

Heathley’s Head of Property, George Websdale said the sale plans aligned with Heathley’s strategy to pursue alternate opportunities in the health and medical sectors.

Through the Heathley Direct Medical Fund No 1, the group has already acquired six properties worth more than $42 million, with an additional $30 million in due diligence, and is aiming for a $150 million portfolio within 18 months.

“Over the past four years, we’ve had an evolving focus on medical and health related assets and we’re continuing to work into that space while exploiting an attractive sales environment by down weighting in the office and industrial sectors,” Mr Websdale said.

“Given the current demand for well leased, high quality commercial property, we believe it’s an opportune time to bring these particular assets to the market and we see inherent value in pursuing a portfolio sale strategy.”

Heathley’s Head of Funds Management, Toby Kreis, said the medium term plan was to wind up the Heathley Diversified Property Fund and return capital to investors.

“We recently undertook a very detailed review, which looked at our options at an asset level and a fund level,” Mr Kreis said.

“We determined that it was in the best interests of unitholders to commence a sell down of the fund’s assets and return capital to our investors, who will hopefully reinvest with us in other opportunities.”

In identifying the first assets to be offered for sale, Mr Kreis said Healthey had selected properties where the WALE and income had been maximised and where there was the opportunity to achieve a strong capital return.

CBRE Associate Director, Capital Markets, Peter Court said the current low cost of capital, lack of available investment product and continuing demand for annuity product would drive interest in the portfolio sale.

“The ability to secure a portfolio with such a long WALE, which provides both geographic and asset class diversification, will be an extremely attractive proposition for prospective purchasers,” Mr Court said.

“The diversity of the tenancy mix and the lease profiles will allow for future value-add opportunities and there is an opportunity to remix a number of the tenancies on the back of some pending lease expiries.”

26 Commercial Road, Newstead is a fully leased, multi-tenanted building, which is prominently located in one of Brisbane’s most sought after office precincts.

The five-storey, 2,305sqm building was developed in 2011 and is occupied by a range of tenants, among them Ray White, OBM International and Trade Services.

Mr Court noted that there had been considerable leasing activity in the Newstead precinct, which has put considerable downward pressure on vacancy rates.

“The underlying strength of this market will be one of the draw cards for purchasers as will the building’s upside potential,” Mr Court said, adding that the building had been strata-titled and could be sold down in the future as individual strata floors.

The other office asset in the portfolio is the recently developed Westlink Green complex, which is situated at Station Avenue, Darra.

The 2,997sqm building was completed late last year and is leased to two tenants – Montrose Access and Graystone, providing a long blended WALE of 7.3 years.

The third Brisbane asset is 67 Bellrick Street, Acacia Ridge. The Director of CBRE’s Queensland Industrial Group, Ed Bull, said the property was well positioned in one of Brisbane’s most established industrial precincts and offered quality tenant covenants in the form of Blue Star Logistics and Hastings Deering.

The recently developed, 5,297sqm facility is suited on a large site of 24,380sqm. It is fully leased to Arrow Transport, providing a WALE of just over 5.8 years.

Future expansion will be one of the attractions for purchasers, with the asset having a low site coverage of 21.8%.