Buyers sniff out AFP K9 facility in Cairns
The Cairns home of the Australian Federal Police’s K9 unit has been listed for sale – but police and their dogs aren’t moving anywhere.
The purpose-built AFP headquarter at 147-153 Machans Beach Rd, Machans Beach will be auctioned on October 27 by Burgess Rawson with PropTrack economist Anne Flaherty confident the property could fetch around $10 million.
With a secure 15-year lease in place until September 2028 and a 4.25% fixed annual rent increase, Ms Flaherty said the property, which is privately owned and leased to the AFP, is a relatively safe investment option given the current economic uncertainty.
“During the pandemic, we saw a shift in focus towards pandemic proof assets but now, with a lot more economic headwinds out there, we’re seeing a real focus on recession proof assets,” Ms Flaherty said.
“Those are properties that during a downturn are going to remain tenanted and as the police are taxpayer funded, this is a safe and sought-after investment.”
Buyers in hot pursuit of hotly contested investment
Selling agent Justin Kramersh said the unique nature of the property, which provides an annual net income of $523,584, was already attracting a variety of investors.
He said there had been 71 enquiries from potential buyers to date including high net worth individuals, institutional funds and syndicators.
“Australian Federal Police assets don’t come to the market all that often, so when they do, they are hotly contested,” Mr Kramersh said.
Constructed in 2013, the modern single level building includes office and admin spaces, a veterinary consult room, kennels, and a large exercise and training yard.
The property is also situated on the doorstep of the Cairns International Airport where dogs are often deployed.
“You really got an A-plus tenant in the Australian Federal Police and you know that the government won’t be going anywhere,” Mr Kramersh said.
“On top of that, Cairns commercial properties are exceptionally tightly held and surplus land to relocate to is non-existent, so the more savvy investors will be aware of that.”
Defensive assets proof popular among buyers
While government leased properties are hard to come by, the K9 unit is not the first AFP property to have hit the market in Cairns this year.
Knight Frank and CBRE recently negotiated the sale of the AFP headquarters at 420-422 Sheridan St, Cairns North with the property currently under contract after being sold to a private investor.
While a sale price has not yet been disclosed – a settlement is not due until the end of October – the property last sold for $13.1 million in 2015, according to the Australian Financial Review.
Much like the K9 facility, the AFP headquarter comes with a 15-year lease with an option to extend and a current annual net income of $1,103,157.
Knight Frank partner Christian Sandstrom said the sale had highlighted a growing hunger for stable and reliable investments.
“A private family is looking to hold it long term because it’s a very secure asset and the commonwealth government still has a long lease on it,” he said.
“However, we also had a number of syndicators looking at the asset but it ended up being purchased by someone private.”
Mr Sandstrom said defensive assets, such as government, medical and allied health-leased buildings, had performed strongly throughout Covid.
“Even during recession times, these assets will continue to be highly sought after but investors are being more selective as the cost of their capital, if they are borrowing, is in excess of 5%,” he said.
“So they are making sure that the fundamentals of the asset, including location and tenants staying on task [to pay rent], are in place before they buy.”