The Pelago residential lots there were close to being fully rented as at 30/06/2019 – 96% leased. The 22 commercial lots fared poorly, with 52% leased. The mix of residential and commercial plots is not consistently reported – 22:102 in the FY19 Annual Report and 21:101 in the AGM presentation dated 22 October 2019, which had the leased percentages higher at 100% and 64% respectively. The residential leases are predominantly corporate leases.
Pelago is the only venture FRI has ever undertaken outside Perth, Initially Pelago was not a bed of roses, because the mining slump circa 2015 occasioned high vacancy rates for Pelago. The current mining boom is a more measured one with cashed-up large miners investing in maintaining tonnage projects, plus incremental tonnage ventures undertaken in measured steps. The current boom is less hectic, and it should be longer, which may, or may not, tempt FRI to again step out of its preferred inner-Perth speciality. It least it has that option.
FRI only gets about 4% of its earnings from rentals. It rarely builds to lease – I think it has only done so thrice in its history (Pelago, Fairlanes and Gateway, and now it only owns the first two of these). I do not know how many projects FRI has completed, but it would be hundreds, because it had built over 5000 apartments a few years ago. If FRI receives a good offer for Pelago, it would sell, as it did with Gateway Office Tower for $72.8m in 2015.
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