Weekly Transaction Update - 5th October 2018
This week we recorded 33 major transactions worth $1.35 billion.
Vicinity's sale of 11 assets for a total of $631M was clearly the largest deal this week with SCA Property Group acquiring 10 of the Centres and a private investor one. The assets were traded at an average cap rate of 7.23% which is well above the 2018 market average of 5.7% recorded across all retail transactions.
The Vicinity portfolio does however have a predominance of neighbourhood centres in regional locations which are often traded at softer cap rates, however for the 44 centres in this category that traded since Jan 2017, the average cap rate was 6.5%. The transaction is therefore likely to re-rate the regional markets. Whilst SCA state that the acquisition will be accretive to their performance, there is no comment from SCA on the outlook for the sector.
The second major asset sale this week was the $200M sale of the Westin Hotel in Perth. The Hotel was developed by Len Buckeridge's BGC and following his death in 2014, his estate has decided to sell the groups assets. The Westin Hotel Perth, Aloft Perth and A-grade suburban office tower 25 Rowe together worth an estimated $350 million were brought to market. The Westin was reportedly acquired by Malaysian's YTL Hospitality REIT.
Also this week, we notice the sale of the development site at 21 Harris Street, Pyrmont to the Milligan Group for $61.6M. The site which remained dormant for several years formed part of the Jacksons Landing development by Lend Lease. The Milligan Group lodged a modified DA in 2017 and appointed Icon to commence construction of the 19,500sqm commercial building in January 2018 with completion due at the end of 2019. French advertising and PR agency, Publicis Groupe have pre-committed to 10,100sqm of the and has signed a lease for 10 years at a net annual rent of $770 a square metre.
Charter Hall's transaction team have been on the Charter Hall Merry Go Round again with the sale of 85 George Street Brisbane. The asset was held by the Charter Hall Office Trust and is now selling for $60M to the Charter Hall Long WALE REIT and Charter Hall Direct PFA Fund. The two new owners will inject further capital to upgrade the building. The 17-storey building with 10,550 square metres of office space, was completed in 1989 and is currently leased to the Queensland Department of Main Roads, with a 10 year lease expiry.
Also in Brisbane, Capital Property Funds have acquired ANL House at 110 Eagle Street from Kingsmede for $35.23M. The property which has a 25% vacancy and a 2.4 yr WALE has the potential for redevelopment, however the small floor plates and the high vacancy in Brisbane, suggests that the property will remain a B Grade asset for some time. The fully yield passing yield on the transaction is estimated to be 8.17% and the equivalent yield, 6.71% given the high cost of incentives in the market.
Scroll through the list below or head to ReSourceData for further details.
* indicates unconfirmed price or apportionment of a portfolio sale