Reg Rowe's Excel property teams up with Tessa for $100m Brisbane apartments
The founder of the Super Cheap Auto chain Reg Rowe is backing Brisbane's apartment boom with his Excel Development Group teaming up with Tessa Group for $100 million worth of developments.
Excel, which is also part owned by Stockland's former head of apartments in Queensland Peter Sherrie, will fund most of what will initially be four small apartment projects in the middle ring suburbs of Brisbane.
Described as a "capital relationship", the deal between Mr Rowe's Excel and Tessa involves both parties investing equity in the business. However, it also gives Excel control over funding arrangements using the balance sheet of the semi-reclusive Mr Rowe, whose wealth is estimated by the BRW Rich List at $871 million this year. "In most cases we will be the funder," Excel managing director Peter Sherrie said. "We can also make a call as to whether we will provide the senior debt or go externally."
With some concerns over supply in the city - there are about 19,800 apartments under construction or being marketed within the inner-city precincts of Brisbane – Excel and Tessa have decided to focus only on developments of around 30 to 50 apartments in areas outside the inner ring with suburbs such as Ascot, Windsor, Bowen Hills and Lutwyche.
"As you would know there are a lot of projects in the inner ring so we have gone to the next one out," Mr Sherrie said.
He said Brisbane was still yet to see any "crazy price growth" for apartments which was actually a good sign of potential.
Tessa Group founder and managing director Brendan Tutt said the joint venture was likely to be a long-term investment. "Working with Peter Sherrie and the Excel team is a great opportunity for our development company as it couples capital and experience," Mr Tutt said.
"Peter is one of Queensland's most respected property figures. We intend to work with Excel long term and it would be our preference to have them as a permanent partner."
Tessa Group which now has more than 90 employees across several property business divisions, will be in charge of marketing the apartments.
Developments already underway include the $20 million Parkside On Folkestone at Bowen Hills. That project with 37 apartments is under construction with Hutchinson Builders. Other projects in the planning stage include the $16.5 million Huntington Residences at Lutwyche comprising 29 apartments and the $20 million Ascot Residences with 34 apartments.
Tessa Developments also lodged a development application this week for a $30 million project comprising 50 apartments in Windsor that will be called Charlton Residences.
Mr Tutt said there were still opportunities to buy sites in Brisbane for residential apartment projects. "You have to pay for good quality sites but we have never been afraid to do that," Mr Tutt said.
Story: Matthew Cranston - The Australian Financial Review