IOOF Acquire Newcastle Office Asset
IOOF Investment Management have acquired 18 Honeysuckle Drive, Newcastle from developer Doma Group for $52.5M.
The 6,524sqm A Grade office building is 100% leased to a 7 corporate and Government tenants providing a weighted average lease expiry of 6.8 years. The property generates a net annual income of $3,235,354, reflecting a 6.2% passing yield and a capital value of $8,000/sqm.
The sale of the asset was brokered by Colliers.
The Doma Group acquired the site in September 2015 for approx $4.85m from the Hunter Development Corporation (HDC) following the development approval in June 2015.
Doma Group developed the building, along with the neighbouring residential apartment building containing 71 units (which together share a carpark entrance via a stratum arrangement), at a cost of circa $39m. The commercial building which was completed in 2017 was designed to meet a 4.5-star NABERS Energy Rating and a 5-Star Green Star rating.
The Doma Group also settled an acquisition this week for their next project across the road at 35 Honeysuckle Drive. Doma paid $15.5m for the 5,200sqm site which fronts the Hunter River and will ultimately contain 92 apartments with ground floor retail units. Doma Group obtained development approval in June this year.
The buildings across the Honeysuckle precinct are built above a patchwork of disused mine shafts which have increased the development risks significantly. The HDC had previously expected developers to bear the risks, however after years of inactivity, HDC developed a mine subsidence mitigation plan which saw themselves undertake the necessary grouting works.