Weekly Transaction Update - 14th December 2018
This week we recorded 25 major transactions worth $910m
AMP & Primewest sells Exchange Centre
GIC are extending their counter cyclical investment program focus on Perth & Brisbane with support for the acquisition of Exchange Tower from Primewest and AMP Capital Wholesale Office Fund. GIC will enter the transaction via a new Primewest Counter Cylical Office Fund in the largest Perth office deal of 2018.
Primewest picked up a half-share in the building in March 2016 from Colonial in a deal valuing the entire complex at $227m. At the time more than a third of the 34,479sq m building lay vacant.
AMP Capital held a pre-emptive opportunity to pick up 100% of the asset from the Colonial syndicate but couldn't get to the purchase price in what at the time was a deteriorating market.
The joint owners invested some capital to upgrade the asset and slashed vacancy from 37.6 per cent to 19.8 per cent in the first six months and then to under 12 per cent.
The sale to GIC reflects a 6.25% cap rate proving Primewest with a $49.5M profit in 2 years (less capex & incentive costs).
GIC's counter cyclical program also supported Primewest's acquisition of 1 William Street, Perth in October 2017 for $175M and earlier this year GIC acquired 343 Albert Street for $108M and 32 Turbott Street, Brisbane for $370m with Charter Hall.
Marprop In St Kilda Buy
Melbourne Fund Manager Bayley Stuart has decided to sell 541 St Kilda Rd for $65m, two years after paying just $48m for the asset. The property is fully leased to Seek to 2021 with no options.
Marprop who has recently expanded ties with German-based funds manager GLL Real Estate Partners will acquire the 8,247sqm building on a yield of circa 5.0%. The purchase price represents a capital value of $7,882 /sqm.
This acquisition follows the purchase in April by Abacus of 464 ST Kilda Rd on a similar yield of 5.1% and a cap value of $6,871/sqm and the sale of 10 Queens Rd in June for $6,897/sqm, also on a 5% yield.
The property was being marketed by JLL and CBRE.
LaSalle Investment snap up Brisbane Office
LaSalle Investment Managers have acquired the heritage listed 293 Queen Street Brisbane for $52.25m.
The property comprises a net lettable area of 5257sq m, with University of Queensland occupying the ground-floor retail component and levels 6 and 7 (28% of the office space).
The purchase price represents a fully leased yield of 6.7%, but a passing yield of just 4%.The building was sold by long-term owner Bloomberg Incorporation Limited, which held it for almost 25 years.
Global architecture firm Woods Bagot partnered with UQ to restore the 91-year-old building’s impressive street presence and transform three interior floors into contemporary, accessible and functional spaces for learning, collaborating and doing business.
Grenfell Street Adelaide sells for 8.4%
77 Grenfell Street Adelaide, an A Grade office building has been sold by German Fund Manager Real IS for $103.5M. The building was acquired by Wingate/IPG on a 8.4% passing yield.
The 16,484sqm property is nearly fully occupied by South Australian government's Department of Planning, Transport and Infrastructure whose current lease will end in 2021, with further lease options. The property has been on the market for 12 months with price expectations of around $105m. In early 2018, Real IS were considering a listing of their portfolio in order to improve liquidity for their investors but later scrapped the idea in favour of single asst sales.
South Australian commercial assets have become more attractive this year following the removal of stamp duty which otherwise adds 5.5% to the transaction costs of the asset.
So far this year, some $672M of commercial assets have changed hands in Adelaide, including 80 Grenfell for $184M, 12 Franklin for $135M and 60 Flinders for $100M.
Review our other transaction data at ReSourceData.
* indicates unconfirmed price or apportionment of a portfolio sale