A Sunshine Coast investment management company has finalised the purchase of two commercial properties for a combined price of almost $20 million.
RM Capital expects the properties at Birtinya and Maroochydore to have the potential to increase investor holdings by as much as 80 per cent within a few years.
Negotiations for the two office blocks – at 20 Innovation Parkway, Birtinya, and Plaza Parade, Maroochydore – were secured months ago off market.
The company then gave investors an opportunity to secure a share of the properties, with offers rapidly becoming oversubscribed.
RM Capital is a subsidiary of RM Developments, a real estate development firm owned by Remi Rafter and Josh Myers.
Mr Rafter said the office market around the country hadn’t performed well in the past five years, especially in Melbourne, Sydney and Brisbane, however the Sunshine Coast was in a bubble as vacancy had remained particularly low.
He said with office vacancy rates below 4 per cent on the Sunshine Coast, the company was expecting to achieve sustained rental growth in both properties over the medium term.
“Land availability, challenges with planning approvals and construction cost pressures will limit further office supply in the foreseeable future,” he said.
No.20 Innovation Parkway, a three-level commercial building within the Birtinya health precinct, was purchased for $12 million, about 32 per cent below replacement cost.
The fully tenanted building provides 2678sqm of lettable space and 108 covered car parking spaces.
Its current passing income is about $975,000, with RM Capital looking to undertake minor building improvements and consider potential further development. It expects investors to achieve an 80 per cent return over five years, at which time the property will likely be sold.
The Maroochydore property comprises a 100 per cent interest in 5 Plaza Parade and a 75 per cent interest in 7 Plaza Parade, a two-level commercial office building that forms part of the Plaza Links development.
Over the next few years RM Capital intends to hold the 2978sqm site and undertake building improvements. It has a 60-metre height limit under the proposed new town plan.
RM Capital secured the property in August for a combined price of $7.775 million.
At the time the building contained four vacant tenancies, with another due to expire in January.
Mr Rafter said that during the 75-day due diligence period they “very aggressively went to the market to source tenants”.
“We were able to find four new tenants, so we settled the property at 91 per cent occupancy. This created value immediately for our investors,” he said.
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In July, the company purchased Oceanside, an eight-level car park next to Sunshine Coast University Hospital comprising 581 parking spaces and five ground-floor retail tenancies.
“Since settlement, active management and targeted leasing initiatives have delivered five consecutive record months, lifting income by more than 17 per cent,” Mr Rafter said.
“It is a strong early outcome for our investors and reinforces the value of disciplined acquisitions supported by hands on asset management.”
