16 Sep 2015
Words Australian Financial Review

Brisbane rights tipped to bring in $13m bounty

Metro Property Development – the Brisbane-based apartment developer that attempted to float earlier this year – is selling the management rights of more the 905 apartments across four towers nearing completion in Brisbane’s inner-city.

Demand for such management portfolios is strong and growing, with a long list of potential candidates likely to go after Metro’s portfolio, such as Vivo Property, Oaks, Mantra, Accor, Quest, property managers such as JLL, and Brisbane-based Tessa Group.

Metro Property Group’s Luke Hartman said the sale was in line with its normal strategy of not retaining management rights. Selling such a large portfolio in a strong market was good timing.

“Brisbane presents a huge opportunity for investors, with relatively low apartment prices compared to Sydney and Melbourne and high rental demand which is consistently delivering yields of around 5 per cent,” Mr Hartman said.

The portfolio includes Metro’s Newstead Towers with 314 apartments, Broadway on Ann with 247 apartments, Canterbury Towers at Central Village with 195 apartments and Aqua at Newstead Central with 149 apartments, which are all due for completion and settlement between April and June next year.

“Now that we are nearing completion on these projects, we are in a position to sell the management rights ahead of settlements in the New Year.

“With all towers at similar stages of construction, it makes the size of this portfolio quite unique.”

Resort Brokers Australia’s Tim Crooks has been appointed to sell the management rights which could fetch well over $13 million.

Mr Crooks said all letting appointments had been secured by Metro, which made it one of the largest and most stable portfolios of management rights to hit the market.

“Demand for management rights is very strong and this portfolio presents a significant and stable opportunity in the permanent let market where appetite is particularly high at the moment,” Mr Crooks said. “Over 95 per cent of the apartments in the portfolio are owned by investors with all appointments secured by Metro.”

Records for management rights include the $15.5 million paid by an investment syndicate in 2010 for the family-orientated Turtle Beach Resort at Mermaid Beach. Metro general manager of sales and marketing Peter Hobbs said across Metro’s six completed projects in Brisbane, 1212 apartments had been made available in the rental pool with more than 16,600 tenant inquiries for these.