Investment philosophy

MPG believes direct investment into commercial property plays an important role in the construction of a balanced investment portfolio, based on attractive income yield and potential for capital growth.

Investment objective

Our core investment objective is to generate tax advantaged income returns from a diversified portfolio of direct property and other incidental investments that have the potential for capital growth and take advantage of the property opportunities within the McMullin Group of companies.

Investment approach

Our approach is to actively manage direct property assets that will be held for the medium to long term. Active property management will involve renewing current leases and targeting new tenants for any vacant space. Upgrading and refurbishing specific assets to attract and maintain occupancy and improve asset values may also be undertaken. We will work with building consultants to develop asset management plans.

The four key investment principles

MPG follows four key investment principles in relation to the development of its property investment products follows:

1. Buy well

The first principle is to buy or develop the properties with an end value at bank valuation or better. We also believe that the best areas to buy in have the following features:

growing industry
growing demographic population and favourable social attitudes
new infrastructure to meet growing population demand
low rental vacancy, and
quality near new or recently refurbished buildings.

We also believe that a thorough property due diligence should be performed including analysis of financial fundamentals, comparative sales, environmental soil testing, pest and structural inspections, easements and restrictions.

2. Use leverage to maximise returns (limited recourse debt)

The second principle is to leverage with conservative debt. By using debt sensibly to buy property, the performance and the return on equity is enhanced. By using limited recourse debt, the banks' security is limited to the property and there is no personal exposure beyond an investor's initial cash contribution.

3. Find quality tenants

We seek to secure quality tenants and endeavour to sign them to long-term leases.

4. Mitigate major risks

We aim to mitigate all major risks of ownership through various strategies, including:

Interest rate increases: Suitable interest rate strategies are entered into to mitigate any interest rate rises.
Structural: We enter into structural building guarantees defects warranties.
Bad tenants: We tend to select quality tenants, often including national brand name retailers.
Vacancy: We build in regions with growing demand and only build and/or acquire quality buildings.
Development: We mitigate development risks through various strategies.