- The capital raised enabled the development and acquisition of six key assets
- QUBE invests mainly in WA
- Rising interest rates have only marginal impact on investors, says QUBE Director Geoff Davieson
QUBE Property Group recorded its most active capital raising period for the 12 months to September 2022, with $60 million raised in equity.
This is the highest level of capital raising in the company’s 27-year history.
The capital raised enables the development and acquisition of six key assets, as part of the group’s diversification strategy. In addition, it will also utilize its long-term residential land pipeline, with the addition of leased investments to add to existing funds under group management.
QUBE currently invests in the industrial, residential and commercial sectors.
QUBE Director Geoff Davieson noted that funds raised in the 12-month period to September supported the acquisition of six assets in the Perth metropolitan and outer areas. This eclipsed the previous high watermark, which was reached in the 2013/14 financial year.
Among the assets identified and acquired in the last 12 months are a large commercial asset on Bannister Road, Canning Vale, Wanneroo and Hammond Park housing estate, as well as an industrial investment in Canning Vale.
Davieson said the asset mix and range across multiple classes highlights the diversity of QUBE’s offering.
“Our reputation in the property industry in WA and as fund managers is solid and built on 27 years of hard work, relationship building and experience,” he said.
“Our investors trust us, and they trust us to deliver a good product and a good return.
“As co-investors with them in every project we complete, our investors are also reassured that our interests are always aligned with their best interests.”
Geoff Davieson, QUBE Property
Mr Davieson said that in a capital market sense, demand for industrial assets is at its highest level in a decade, while industrial vacancy rates are at historic lows. This pushed effective rents higher and encouraged developers to bring additional inventory online, both pre-committed and speculative.
He noted that the office market recovery in WA is underway, especially for good quality and well located assets.
“With the worst of COVID and working from home well behind us, office occupancy in Perth CBD and outlying offices is on the rise and utilization rates are encouraging among the highest in the country,” he said. he declares.
“We believe Perth’s residential market should see generally healthy demand for years to come, driven by WA’s attractive job market, which is expected to bring population growth back to historical pre-COVID norms.”
Mr Davieson noted that investors in QUBE are mainly WA companies, high net worth individuals and family offices. The group’s investor base remains relatively homogeneous and tight.
“We typically welcome a handful of new investors as each new project is brought to market and we generally find that they have come to us as a result of positive word of mouth and through the development of strong ongoing relationships. we have with our existing pool of investors, many of whom have been with us for decades.
“Consistent with the capital raised during this period, we have also been in a privileged position where we have had to interrupt interest registrations for assets within hours rather than days or weeks, which is an excellent position. “
He said that although QUBE had considered acquiring assets beyond WA before the pandemic, which was suspended due to border restrictions, the group remained primarily focused on WA, although it did not excluded from venturing into the Eastern States.
“The East Coast market has become overheated over the past few years and has not represented what we consider to be good value for our investors.
“A key driver of the success and stability of the WA market at present remains its relative affordability and modest gains on the back of an extended period of relatively subdued growth compared to that experienced in the markets of Melbourne, Sydney and Brisbane.
“If we came across an asset outside of WA that we believe would add value to our investor base, we would certainly look into that, but at the moment our focus is primarily on WA assets.”
Interest rates have only a “marginal” impact on investors
As for recent increases in cash rates, Mr Davieson noted that this had only had a marginal impact on investors’ appetite for real estate.
“Our investment opportunities rarely have a duration of less than four years, so in terms of investment horizon, we are looking well beyond the current cycle of interest rate tightening. Overall, our experience shows that interest rate hikes do not appear to have dampened investor appetite for the assets we seek.
“Most of our investors are well diversified across real estate, equities and cash and therefore continue to seek the real estate exposure and access to key assets that we are able to offer.”
He noted that given that Australia had weathered the Covid era relatively well, he said the short to medium term outlook remained strong, not least thanks to strong growth in the mining sector despite global instability.
“Employment options, job security and lifestyle attractions make WA a relatively safe haven in uncertain times and I think this will continue for a few years and be reflected in the performance of our property market .
“There are certainly global issues playing out now which should cause further economic difficulties that Australia will not be immune to, but the outlook for the Perth and WA property market more generally appears to be in relatively good shape. for the next five years at least,” he concluded.