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Real estate investment firm Qualitas has announced its acquisition of the Allied Pinnacle property portfolio for around $400 million. 
The portfolio comprises ten flour-milling and bakery operations across Australia. Allied Pinnacle will maintain full control of the operations at the sites through 30-year, triple-net leases.
Purchased from Allied Pinnacle, the portfolio is expected to provide a yield of 6%. The tenant has a 100-year trading history and is the largest supplier of flour for human consumption in Australia, with a market share of approximately 40% servicing major grocery retailers, industrial bakeries and over 2,000 independent bakeries nationally.
Mark Fischer, Managing Director, Principal Investments at Qualitas, said: “These properties represent core strategic assets of the tenant and provide a national network of irreplaceable production facilities that are critical to the nation’s food supply.TENAN
“The long-term leases provide operating certainty for the tenant and positive returns for investors, as the tenant has a long history and significant market share. The properties provide exposure to a resilient part of the food sector, with flour-based products making up over 20% of the Australian diet. The underlying real estate is predominantly urban infill land, with most sites in prime suburban locations of major cities.”
Mr Fischer said the properties have been placed into a wholesale vehicle, the Qualitas Food Infrastructure Fund. There has been strong investor support for the fund, predominantly from European and Asian pension and life insurance capital as well as domestic institutional investors, he said.
“This is a unique offering for investors, as it has elements consistent across real estate, infrastructure and agricultural investments, and brings benefits from each sector. Our thesisis that there is a developing universe of “cross-over” investors from each of those sectorswho are increasingly focused on what we call ‘soft infrastructure’.
“This delivers long-duration income without the regulatory risk that comes with hard infrastructure or the tenant demand vagaries of traditional real estate.
“Deals like this don’t come along often, so we’re really pleased that Qualitas was the successful bidder,” Mr Fischer said.
James Ajaka, Allied Pinnacle CEO, said: “We are very pleased to have sold these tenproperties to Qualitas. This partnership will allow us to maintain full operational control of ourbusiness, while Qualitas take ownership of a great suite of properties”.
An extensive sales process was run by CBRE and Charter Keck Cramer, with Arnold Bloch Leibler advising Qualitas on the acquisition and King &amp; Wood Mallesons advising the vendor. Minter Ellison advised Qualitas on the establishment of the Qualitas Food Infrastructure Fund.
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Qualitas buys Allied Pinnacle property portfolio in $400 million deal

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Three service stations were among the four properties sold for a total of $14.4 million during Cushman &amp; Wakefield’s inaugural portfolio auctions held in Sydney and Melbourne.
Two unsold properties are under negotiation, the real estate agency said.
The three Caltex petrol stations in Melbourne and Sydney all have 15-year leases in place. 
The auction was led by the sale of a 2,665 sqm Mt Waverley Caltex site at <a href="https://www.realcommercial.com.au/property-retail-vic-mount+waverley-502560530" target="_blank">622 – 626 Blackburn Road</a> (picture above) to a private investor for $4.3 million on a low yield of 3.48%. 
The fourth property sold was at <a href="https://www.realcommercial.com.au/property-offices-nsw-wagga+wagga-502547138" target="_blank">72 Baylis Street</a> in Wagga Wagga, New South Wales, tenanted by National Australia Bank. It changed hands for the first time in 25 years, for $2.31 million on a 6.72% yield. 
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2017/10/20/NABWagga.jpg" alt="">
The auctions were held at Cushman &amp; Wakefield’s Sydney and Melbourne offices, with the campaign led by Michael Collins.
The auctioneer was Damien Cooley from Cooley Auctions. 
“The result of Cushman &amp; Wakefield’s inaugural portfolio auction delivered a strong outcome for vendors, and reaffirmed the appetite amongst high net worth investors to secure retail properties with strong lease covenants and long-term blue chip tenants,” said Collins.
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Four sites fetch $14.4 million at Cushman & Wakefield's first portfolio auction

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GUEST OBSERVER
Not being able to pay loan repayments on time is one of the most frightening and common concerns of property investors, and rightly so.
Last year over 50,000 full-time jobs were lost in Australia alone, and with less than half of the country having private health insurance, many investors would be at risk of losing their portfolio if an unforeseen circumstance such as being fired or becoming ill, arose.
Preparing for situations that may result in a loss or diversion of income is essential when it comes to safeguarding your property portfolio. Although preparation is paramount, there are also processes that can be followed once unexpected financial difficulties strike that can offer assistance to avoid an investor having to sell.
To ensure investors are properly prepared prior to any unforeseen circumstances arising, see below:
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<li>
Make income protection insurance a priority. Often income insurance is considered too expensive or unnecessary; however as an investor it is vital to safeguard your portfolio. Although it will be an additional cost to pay monthly, if an illness or injury occurs, most policies will cover 80 percent of your income, meaning expenses incurred via your portfolio are still covered until you recover.  Also, in most cases income protection premiums are a tax deduction.</li>
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<li>
Research and ensure you have the policy which best suits you. Unfortunately there isn’t one specific income protection policy that suits everyone. To ensure you are choosing the most cost-effective and beneficial option for your situation, make sure you compare various options before committing to a policy. </li>
</ul>
<ul>
<li>
Aim to have a neutral to positive cash flow portfolio. If overall across a property portfolio the rents equal or exceed the costs and repayments, sustaining the portfolio will not be contingent on job income and will give peace of mind in the event you are forced to stop working.</li>
</ul>
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<li>
Create a buffer in your offset account. Once an investor has an offset account set up, you can keep surplus funds there which will give you two primary benefits:</li>
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<ul>
<li>Offset a portion of the interest being paid on the home loan.</li>
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<li>If the property is negatively geared and you experience an unforeseen circumstance, these funds could be used to cover the weekly shortfall in rent.</li>
</ul>
If unforeseen circumstances arise that investors aren’t prepared for:
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<li>
Seek immediate expert counsel. If an unforeseen circumstance has caught you off guard and you are fearful for how this will affect your finances, arrange to meet with an accountant or financial planner immediately to implement a plan that ensures the obligatory loan repayment is able to be made.</li>
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<li>
Advise the bank of the situation. All lenders have a financial hardship line, so take the time to work with them on a suitable payment arrangement so you keep on top of your repayments.</li>
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<li>
Research what the current market rent is on each of your properties.  The average rent in each market changes constantly. Keeping up to date with the current rate ensures you are able to see where you can increase the rent for better cash flow.</li>
</ul>
Zaki Ameer is founder of Dream Design Property and can be contacted <a href="https://www.ddpproperty.com.au/" target="_blank">here</a>.
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How to safeguard your property: Zaki Ameer

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Global Real Estate Investment Manager Cromwell Property Group today reported operating profit boosted by transactional income of $164.5 million for the year to 30 June 2016. 
Cromwell Chief Executive Officer Paul Weightman said Cromwell’s strategy of realising gains and recycling capital, and its internal management model, created value from active management of assets, generated performance fees, allowed it to act opportunistically and enabled it to effectively manage downside risk.
 “FY16 was a year in which we benefitted from a number of one-off transactions,” said Mr. Weightman.
Portfolio valuations increased by $250.3 million during the year net of property improvements, lease costs and incentives.
Net property earnings, on a like for like basis, increased 1.6 percent with increases in rental income being offset by some vacancy in Brisbane and Canberra. Overall tenant quality remains strong with Government and government related entities contributing 46 percent of gross income.
As at 30 June 2016, the portfolio had a Weighted Average Lease Expiry (WALE) of 6.3 years and a vacancy rate of 10.6 percent compared to the national CBD office average of 11.9 percent (JLL).
“Our NSW and VIC assets continue to perform well and we are actively managing the vacancy in our Queensland and Canberra assets”, Mr Weightman said.
Cromwell expects tenant demand, outside of Sydney, to remain weak resulting in subdued growth in like for like property income in FY17 and FY18.
Cromwell was a net seller in FY16 selling $209 million of assets with a net gain of $19.4 million (1.1 cps) including:
Asset Sale ValueDate Disposed
43 Bridge Street, Hurstville, NSW$37 millionJuly 2015
4 Bligh Street, Sydney, NSW$68 millionAugust 2015
Terrace Office Park, Brisbane, QLD$31 millionSeptember 2015
100 Waymouth Street, Adelaide, SA$73 millionDecember 2015
A proportion of the proceeds were used to repay debt with the balance being held as cash.
“Given the heightened competition for assets in all markets, Cromwell’s preference is to recycle capital from disposals to value adding opportunities in its existing portfolio. We are investing $300 million for the future with the redevelopment of Northpoint Tower in North Sydney and the development of the new Department of Social Services national headquarters at Tuggeranong Office Park in ACT,” Mr Weightman said.
“Both projects are on track and will contribute earnings growth and valuation uplifts to the Group in the near future. Demolition works have just finished, and construction will begin next month, at Northpoint, while construction will finish shortly at Tuggeranong,” he added.
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Cromwell Property Group was a net seller in FY16

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SPONSORED POST
When considering property investment it pays to look at what the professionals do - the big industry and retail superannuation funds and institutional investment organisations such as insurance companies.
Professional investors generally allocate anywhere from 8 percent to 15 percent to property within their portfolio. These institutional investors live or die by their results – there is no room for emotion or personal preference. 
So what types of property?
One sub-class of property the professionals do not typically hold is residential. Why? Because long-term average yields on residential property are generally inferior to quality investment grade real estate.
Commercial property on the other hand is able to generate distribution yields in excess of 6.50 percent for investors. The dispersed or small scale nature of residential property means the costs associated with the accumulation and management of residential property also contribute to it being viewed as a less than optimal option.
Of course dinner parties are peppered with wonderful residential success stories, but headline numbers and real rates of return can sometimes be poles apart. Residential real estate investment has high transaction costs including stamp duty, legal and agent fees, and  holding costs of land tax, insurance, council/water rates, external property management, vacancies, repairs and capital gains tax.
Whilst some of these costs are also applicable to commercial property, many costs like repairs, insurance and rates are often paid for by the tenant instead and other costs are lower due to the economies of scale obtainable (such as agents fee). The other big difference is that the rents paid by commercial tenants are generally much higher as a percentage of the cost of the initial investment. 
Further, the heat in the residential real estate markets in Sydney and Melbourne is showing some signs of coming off the boil. Hopefully this will allow a chance to regroup and make more considered decisions.
Professional investors typically invest in investment-grade commercial property such as offices, warehouses, hospitality and shopping centres. The term ‘investment-grade’ is critical. In short, it means high quality buildings with high quality tenants, often with long leases, which translates into strong and predictable earnings flows.
The two pathways to investment-grade commercial property are Real Estate Investment Trusts (REITS) and unlisted property trusts, also often known as ‘direct property’. Charter Hall is now one of the largest and most successful commercial property investment group’s in Australia and consistently holds up to five of the top 10 performing funds as ranked by performance in The Property Council/IPD Australian Unlisted Core Retail Property Fund Index.
Regardless of what type of property, take the time to consider the full suite of property options available and proceed with care with a trusted and well respected Manager.
Steve Bennett is fund manager for Direct Property, Charter Hall and can be contacted <a href="https://www.charterhalldirect.com.au/?utm_source=propertyobserver&amp;utm_medium=post&amp;utm_content=charterhalldirectproperty&amp;utm_campaign=mk4" target="_blank">here</a>.
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What kind of property should be in my investment portfolio? Charter Hall

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Scentre Group, owner and operator of Westfield Australia and New Zealand, has reported comparable specialty sales in the Australian portfolio grew 5.3% over the past 12 months, with average annual specialty sales of $10,826 per square metre (psm).
It noted strong sales performance was seen across most categories, with good increases in the fashion, footwear, jewellery, leisure, health and beauty, technology and cinemas categories.
Average annual specialty retail sales in New Zealand increased to NZ$12,117 psm, representing comparable specialty sales growth of 6.6% for the year.
In Australia, average specialty retail sales had been at $10,666 per square metre and comparable specialty store sales growth was 5.8% for the nine months to September.
In New Zealand, average specialty retail sales increased to NZ$10,534 per square metre, and comparable specialty store sales growth was 6.5% for the initial nine months.
 
Comparable property net operating income increased 2.6% for the 12 months, higher than the forecast range of 2.0 - 2.5%, reflecting lower vacancies and additional income streams. 
Scentre was spun out of the Westfield empire in 2014, and now runs the local malls. Westfield Corp runs the overseas malls.
It reported a 58.9 per cent drop in after tax profit to $2.71 billion for the full year, despite a 32.5 per cent jump in revenue to $2.87 billion. 
Funds from operations for the period was $1.199 billion. 
The group will pay a final dividend of 10.45c a security on February 29, taking the total dividend for the year to 20.9c. 
The results were for the 12 months to 31 December 2015. 
The Chairman of Scentre Group, Mr Frank Lowy said the rationale for the creation of Scentre Group has been validated with the strong results released today.
“Scentre Group’s pre-eminent portfolio and unique market position have provided a strong operating performance and excellent returns for security-holders since the Group was established as a separate entity.”
Scentre Group’s shopping centre assets saw significant revaluations of $1.5 billion during the year.
The value increase was driven by growth in underlying income, the completion of developments and a firming of capitalisation rates across the portfolio. The portfolio weighted average capitalisation rate reduced by 38 bp during 2015 to 5.57% reflecting the quality of the centres.
At 31 December 2015, Scentre Group had a balance sheet with total assets of $31.8 billion, a gearing ratio of 33.3% and liquidity of $3.7 billion.  
In 2015, the Group commenced $830 million (SCG share: $583 million) of redevelopments, including projects at Casey Central, Chatswood, Hurstville, Kotara, North Lakes and Warringah Mall.
“We have already opened the redevelopments at Chatswood, Hurstville, North Lakes and Kotara which are trading strongly. These developments will be accretive to earnings and create substantial long-term value,” chief executive officer of Scentre Group, Peter Allen, said
These recently opened developments featured new experiential precincts and offerings for shoppers and retailers with:
<ul>
<li>a “Hawker Lane” Asian dining market at Westfield Chatswood alongside a new five-level mall on Victoria Avenue including a flagship two level Topshop Topman, H&amp;M, Uniqlo, a relocated Rebel Sport and 40 new retailers.</li>
<li>an extensive ambience upgrade and a new rooftop dining and entertainment precinct at Westfield Hurstville, with a range of late-trading casual dining outlets, linking directly to the refurbished Event Cinemas. New retailers to the centre include a Woolworths supermarket, BIG W discount department store, JB Hi-Fi HOME, Cotton On Mega Store and Rebel Sport.</li>
<li>“The Marketplace” fresh food and “The Laneway” al fresco dining precincts at Westfield North Lakes. </li>
<li>A Hunter Valley-inspired outdoor dining and entertainment precinct, “The Rooftop”, featuring nine new restaurants, a performance stage, play area, and a new Event Cinemas complex at Westfield Kotara.</li>
</ul>
In 2016, the Group has commenced the $355 million redevelopment at Westfield Chermside, which will include the introduction of five international mini-major retailers, a broadening of the range and depth of the centre’s fashion offer as well as the largest lifestyle and entertainment precinct in an Australian centre. The centre will add 26,000 sqm of retail space bringing the total size to 156,643 sqm on completion.
At Westfield North Lakes the Group has also commenced the $140 million Stage 2 IKEA Link Mall project which connects a new IKEA-owned store with the existing centre. The development will include a new Kmart discount department store, JB Hi-Fi HOME, Rebel and approximately 50 new specialty stores over a single level with completion expected in December 2016.
Pre-development work continues across the portfolio and the Group maintains a forward development pipeline in excess of $3 billion.
During the year Scentre Group completed the sales of Figtree, Strathpine, Warrawong and North Rocks in Australia for gross proceeds of $783 million and also announced the sales of Glenfield, Queensgate and Chartwell in New Zealand for a total of NZ$549 million, the latter two being expected to settle in the first half of 2016. 
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Increased speciality store sales, but stronger in NZ than Australia: Scentre 

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Caledonia Investments seems set to walk away from its ­hostile takeover bid for ALE Property Group, owner of a $900 million pub portfolio.
The largest investor in ALE Property lobbed its $770-million all-cash takeover offer in October.
But the Australian Financial Review's authoritative Street Talk column says Caledonia is expected to formally withdraw after prolonged talks with the company failed to strike a deal on the offer at a 74% premium to ALE's net tangible asset value.
ALE owns a $900 million portfolio of 86 pubs which are operated by ALH, a joint venture between Woolworths and Bruce Mathieson.
Woolworths is ALE's second largest shareholder with around an 8% stake.
Led by Mark Nelson, the Sydney-based private investment group holds around 26% of ALE, which engaged Macquarie Capital for its defence.
Caledonia, which hired Moelis &amp; Company, was set up in 1992 to manage the fortunes of the Darling family and later adding the Nelson and Vicars families.
It has $2.8 billion under management.
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Caledonia Investments takeover bid for ALE pub portfolio languishes

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As many property investors know, the city you currently call home isn’t always the best location to invest.
But there are many steps to the buying process, and they can differ from state to state.
There are plenty of reasons to purchase property interstate.
You may want to diversify your portfolio to lower your risk profile.
Perhaps you're planning a move next year, but you know that now is the right time to buy.
Or maybe you've heard that the next big up and coming suburb isn't on your doorstep, but 2,000 kilometres away.
Even if you are a seasoned property investor in your local area, there are some key differences between buying locally and purchasing further away.
Investing interstate can be difficult, especially if you're not experienced and you're looking to invest somewhere you haven't lived before.
There are a range of experts who can assist you with an interstate purchase and help alleviate the costs of travelling back and forth.
Conveyancers or specialist lawyers can help prepare and lodge your legal documents (including your contract), handle your deposit, research the property and calculate your expenses. They can also assist in the settlement process.
A buyer's agent can help you inspect properties and do a lot of the footwork for you. They may also be able to refer you to reputable local experts to help carry out inspections.
Make sure you communicate honestly and often with those helping you invest interstate, and make the most of the experts available.
While buying property interstate can seem like a daunting task, there are a lot of benefits to developing your property portfolio beyond the bounds of your local neighbourhood. Make sure you contact reputable, independent experts and do your homework.
Don’t forget that stamp duty or land transfer taxes change from state to state, and depend your property’s intended purpose.
Each state’s revenue office website has a stamp duty calculator that can help you estimate how much you’ll be charged.
Purchasing interstate is a great way to spread risk across your property’s portfolio or capitalise on growth areas – just make sure you do your homework.
 
For more real estate traps and tips visit <a href="https://realestatetraps.com.au/">realestatetraps.com.au</a>
 
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Tips for buying property interstate

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Developer Tim Gurner has his Footscray apartment project site up for sale, having secured a permit for a $220 million twin tower project.
The Warde Street GURNER site has been listed for sale as it seeks to divide its growing portfolio evenly between Melbourne and Brisbane.
The 2,190 sqm site, located at 1 Warde Street Footscray and positioned within the State Government’s Joseph Road regeneration precinct, has been listed for sale by Colliers International.
The approved permit allows for between 350 to 380 apartments plus 4000sqm of retail at ground level.
The site has an approximate end value of over $220 million, GURNER founder and director, Tim Gurner says.
It is about to launch two new projects in Melbourne.
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Tim Gurner lists redundant Footscray apartment project site

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Investor demand for prime retail property lifted valuations in BWP Trust’s portfolio by $108.5 million in the 2015 financial year as the trust reported a strong full-year result. 
BWP Trust, which owns retail properties mainly tenanted by Bunnings, reported a full-year net profit of $210.1 million, up from $149.1 million in 2014. Its income increased by 13.7% to $144.9 million.
“Our objective is to keep building on the current portfolio, and that’s from a pretty solid base,” BWP’s managing director Michael Wedgwood said in announcing the result. 
The trust bought one Bunnings Warehouse development site at Australind, Western Australia, in 2015. It completed the development there, along with six other developments. 
Wedgwood said it would be difficult for the trust to grow by acquiring additional properties in the near term as low interest rates were encouraging investors to look to property for yield, pushing capitalisation rates lower.
“It’s certainly a sellers’ market,” he said. 
The trust plans to divest a property in Cairns after Bunnings relocated to a nearby site. It sold six properties in 2015.
“We will continue to review the portfolio regularly and assess all properties. If it makes sense to over time, we will look to divest properties but it’s not top priority at the moment,” Wedgwood said. 
The portfolio has a 100% occupancy rate. Its weighted average lease expiry was 6.6 years as at June 30, 2015. 
Low inflation limited rental growth to 2.6%, compared with 4% for the previous year. Around 65% of the trust’s rental income is subject to CPI increases. 
BWP Trust was one of the strongest performing shares in the property sector during July, when the A-RIET index outperformed the broader market.
It paid a final distribution of 8.17 cents, making a total of 15.84 cents for the full year, up 7.7% on the previous year. It forecast distribution growth of about 5% for the 2016 financial year. 
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