The Forza Grosvenor Street Fund was an unlisted property fund which held a 3,880m² landholding with a four level, 470 bay car park located on the Yarra River in Abbotsford, Victoria.
The Property was purchased for $12,000,000 on an attractive initial yield of 6.76% and a WALE of 7.30 years. A key tenet of the Fund strategy was to pursue value adding opportunities to maximise rent through additions and conversion to alternative uses however a VCAT decision in 2022 to reject the Fund’s planning permit application diminished this potential near term.
Given the asset was purchased well, a decision was taken to test the market on an asset sale. Ultimately, the Fund achieved a sale price of $14,600,000 which generated a 1.4 times equity multiple and a net of fees IRR of ~8%.
Whilst we would have much preferred to have generated a higher IRR, what this result does show is that buying well, and having multiple investment strategies, are essential elements in preserving capital. We are pleased that despite being unable to deliver the primary redevelopment objective, we were able to preserve capital and still generate an acceptable return. For Forza Capital, this is an essential tenet of our business – we seek asymmetric investments where we can access the upside in an investment whilst locking out downside risk to invested capital.
The Fund acquired the Property given its strong income, as well as the size and strategic nature of the site, which overlooks the Yarra River.
