Conversation with David Schwartz—Primewest Group
Managing partner Sean McMahon chats with David Schwartz, Primewest Group director, about their successful listing on the ASX, how they have gone beyond their home turf of Western Australia to investing nation-wide, and their strategies behind pursuing investment in 'daily needs convenience centres'.
SM After 25 years in business, Primewest Group (ASX:PWG) listed on the ASX late last year following an oversubscribed $100 million IPO from existing investors and institutions. What are the key factors behind your success and your key messages for investors?
DS Over the years, we have grown steadily and built up a portfolio valued at over $4 billion. As we have grown, we have identified new and exciting opportunities, some of which require large sums of capital. Having always been a private company we were restrained by capital. However, our recent listing enables us to do two things: first up, it gives us the opportunity to participate in some larger transactions. Secondly, it means we can give our investors the opportunity to acquire stock in the manager.
Some of our investors have been on this journey with us for over 20 years. We have been very well supported in the market due to our strong focus on investor returns. What makes us different from the rest is that our three directors have always been aligned with our investors and co-invested alongside them.
SM As a Perth-based fund manager, is your focus on Western Australia or nation‑wide?
DS Of our national $4 billion portfolio, 60 percent is based in WA. We are not, and have never been, an investor restricted by where to invest. We are what I would describe as an 'entrepreneurial investor'. We will go wherever we think will give our investors the best return on the funds invested. However, we are heavily weighted towards Perth for the following reasons:
- When we established Primewest we were originally focused on WA assets, and we still own some of those assets today.
- We currently see Perth as counter-cyclical. Perth has had a difficult time post the mining boom and this has presented us with great buying opportunities.
- WA is our home turf. We understand the market, we know the tenants and agents, and we can react faster and better than anybody in our market.
SM What are the key themes you see emerging in the Australian property market over the next few years?
DS We believe the economy will perform steadily over the next few years. We are in a low interest rate environment, and while interest rates are low property investment is seen as a 'safe haven' offering better returns than the banks. We think Perth will outperform the other major capital cities.
SM You recently acquired a $30 million shopping centre in Coffs Harbor (Moonee Market Shopping Centre), New South Wales. What is your strategy behind the acquisition of a regional shopping centre?
DS We have always liked this sector and refer to it as 'daily needs convenience centres'. This property is well located and the turnover for some of the retailers has shown a steady growth rate of 7.5 percent year on year. Before we purchase any of these convenience centres we engage a demographer to prepare a report to determine future growth in the area. The report came back very positive about the prospect for growth in the area.
We also believe we can add value for our investors by actively managing and marketing the centre as we have done elsewhere. Primewest now manages about $900 million worth of convenience centres around the country. Part of our active management strategy is to make sure we have the right tenant in the correct location in the centre.