They were once two of Melbourne’s best known commercial real estate agents, now Chris Marks and John Henderson are making their mark on the funds management sector.
Yesterday, after buying the high profile Brandon Park Business Park for $57.5 million in Melbourne’s south eastern suburbs, Marks Henderson Funds Management signalled to the market its cheque book may well be traveling north.
Henderson yesterday told Australian Property Journal that MHFM does not have a set target and its future growth is only dependent on opportunities.
With the purchase of the Brandon Park Business Park, MHFM’s portfolio has increased to well in excess of $200 million. The group already owns an industrial estate Enterprise Park in Mulgrave on Springvale Road and another, the Brooklyn Industrial Estate in Brooklyn, Melbourne.
MHFM also owns an office building at 18 Oliver Lane, Melbourne CBD and an office building at 390 St Kilda Road, Melbourne.
Commonwealth Property Office Fund agreed to sell Brandon Business Park at 540 Springvale Road, Glen Waverley, to MH Brandon Pty Ltd, as Trustee for The Brandon Business Park Unit Trust.
According to CPA the property has a current book valuation of $46.7 million.
Henderson said MHFM are not traditional fund managers and are backed by private equity firms.
Henderson added that the pair utilises their wealth of property experience and contacts to pair source quality properties for its portfolio.
Prior to forming MHFM a decade or so ago, Marks was managing director of Jones Lang La Salle Victoria (and previously Jones Lang Wootton) while Henderson was JLL’s Investment Director. They are recognised as two of Australia’s most successful commercial real estate agents.
Whilst most of MHFM’s assets are in Melbourne, Henderson said the group has set its sight on the Sydney market.
“We looking for Sydney and Melbourne commercial and industrial assets,” Henderson told Australian Property Journal.
Henderson said the group bought the Brandon Park asset because he believes it is the best office business park in suburban Melbourne.
“We have known for a long time that it was a quality asset, it has good location and has been well handled. We see great potential for capital and income growth.” he added.
CPA fund manager Charles Moore said Brandon Park Business Park was identified earlier this year as being a non-core asset for the fund portfolio.
“The sale price, which is considerably above book value, is an excellent result given the very tough leasing conditions being experienced in that particular suburban office market.
“The strength of the investment market resulted in a number of competitive bids and has enabled the Fund to mitigate its ongoing leasing and income risk from this asset whilst delivering an excellent total return result,” Moore added.
Moore said the sale proceeds would initially be utilised to retire debt and bolster retained earnings, while longer term the proceeds would be deployed into the fund’s development Commonwealth Property Office Fund pipeline.
The sale of Brandon Business Park improves the fund’s weighted average lease expiry from 5.4 years at 30 June 2006, to 5.5 years. Also, as a result of the disposal, the fund’s portfolio occupancy by income also improves, up from 95.2% to 95.9% (based on figures as at 30 June 2006).
MHFM recognises the potential of improving Brandon Park’s incomes as the 16,862 sqm of office park is currently just 60% occupied.
CPA bought the property in October 2002 for $40.5 million.
By Nelson Yap
