Sovereign MF launches first property syndicate

Boutique Melbourne property manager Sovereign MF has launched its first property syndicate while settling a land deal for its residential fund.

The manager has bought a 5,200 square metre Melbourne CBD office building for $21 million. The syndicate hopes to raise $10.9 million of the purchase price and is forecasting a return of 8.5 per cent for the next few years.

Sovereign managing director Michael Grochowski said the building is being refurbished and will include a multi-tenant food court at the base of the building.

“We have also obtained preliminary planning advice on adding one to three floors of extra office space that will considerably enhance the end value of the property when the syndicate ends in seven years time,” he said.

“In addition, this property is well suited to be strata-titled, which is something we would consider at the end of the syndicate.”

The Little Collins Street building has 10 floors of office space and was built in 1986.

Meanwhile, Sovereign has settled on an 18.78 hectare parcel of land in Melbourne’s western suburbs.

This will form the basis of the Sovereign Tarneit Land Fund that will be developed into 254 residential lots to be released on a staged basis.

The land has planning approval for the sub-division and the manager is predicting pre-tax returns of 18.6 per cent a year.

Grochowski said the company was looking for further acquisitions in all commercial sectors for new funds across all property sectors.