- The capital raised allowed for the development and acquisition of six key assets
- QUBE predominantly invests in WA
- Rising interest rates only marginally impacting investors, QUBE Director Geoff Davieson says
QUBE Property Group has recorded its most active period of capital raising for the 12 months to September 2022, with $60 million raised in investor equity.
This is the highest level of capital raising in the company’s 27-year history.
The capital raised allows for the development and acquisition of six key assets, as part of the group’s diversification strategy. Additionally, it will also use up its long-term residential land pipeline, with the addition of leased investments to add to the group’s existing funds under management.
QUBE currently invests in the industrial, residential and commercial sectors.
QUBE Director Geoff Davieson noted the funds raised during the 12-month period to September supported the acquisition of six assets across the broader Perth metropolitan and outer areas. This eclipsed the previous high watermark, which was achieved during the 2013/14 financial year.
Among the assets identified and acquired during the past 12 months include a large format retail asset on Bannister Road, Canning Vale, Wanneroo and Hammond Park land subdivision, along with an industrial investment in Canning Vale.
Mr Davieson said the spread and range of assets across multiple classes highlights the diversity of QUBE’s offering.
“Our reputation in the property sector in WA and as fund managers is strong and that is 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 deliver, our investors also take comfort 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 strongest level in decade, while industrial vacancy rates are at historical lows. This has pushed effective rents higher and encouraged developers to bring additional stock online, both pre-committed and speculative.
He noted the recovery of the office market in WA is underway, especially for good quality, well-located assets.
“With the worst of COVID and work-from-home well behind us, Perth CBD and fringe office occupancy is on the rise and utilisation rates are encouragingly among the highest in the nation,” he said.
“We believe the residential market in Perth is set for generally healthy demand for some years ahead buoyed by WA’s attractive employment market which is set to drive population growth back to its historical, pre-COVID norms.”
Mr Davieson noted that QUBE investors are predominantly WA businesses, high-net-worth individuals and family offices. The group’s investor base remains relatively consistent and tightly held.
“We typically get a handful of first-time investors coming on board as each new project is offered to the market and we generally find that they have come to us as a result of positive word of mouth and thanks to the development of strong ongoing relationships we have with our existing investor pool, many of whom have been with us for decades.”
“In line with the equity raised during this period, we’ve also been in a fortunate position where we’ve had to cut off registrations of interest for assets in hours rather than days or weeks, which is a great position to be in.”
He said that while QUBE had considered acquiring assets beyond WA pre-pandemic, which was put on hold due to border restrictions, the group remained primarily WA focused, although it hasn’t ruled out venturing into the eastern states.
“The east coast market became overheated in the last few years and didn’t represent what we see as good value for our investors.
“One of the key drivers of the ongoing success and stability of the WA market at this time remains its relative affordability and modest gains off the back of a prolonged period of relatively subdued growth in comparison to that experienced in Melbourne, Sydney and Brisbane markets.
“If we did come across an asset outside WA that we believed delivered value to our investor base then we would certainly look at that, but for the time being we are primarily focused on WA assets.”
Interest rates only ‘marginally’ impacting investors
In regards to the recent cash rate rises, Mr Davieson noted this only had marginally impacted investors’ appetite for property.
“Our investment opportunities rarely have a timeframe of less than four years so in terms of our investment horizon, we are looking well beyond the present interest rate tightening cycle. On balance our experience is interest rate rises don’t seem to have dampened investor appetite for the assets we are chasing.
“Most of our investors are well diversified across property, equities and cash and as a result continue to seek the property exposure and access to key assets that we are able to offer.”
He noted that given Australia had weathered the Covid-era relatively well, he said the short to medium-term outlook remained strong, especially thanks to the mining sector growing strongly in spite of global instability.
“The employment options, job security and lifestyle attractions make WA a relatively safe haven in uncertain times and I think that will continue for some years to come and will be reflected in the performance of our property market.
“There are certainly global issues playing out now that are set to cause further economic pain that Australia will not be immune to, however the outlook for the Perth and WA property market more broadly appears to be in relatively good shape for the next five years at least,” he concluded.
