Cromwell moves Queanbeyan asset into fund
Cromwell Direct Property Fund (Fund) has secured its seventh direct commercial property asset, located in the city of Queanbeyan, approximately 15 kilometres south-east of the Canberra CBD for an acquisition price of $35 million, reflecting a passing yield of 6.0%.
The acquisition comprises a 4,052sqm site with 6,300sqm of net lettable area over a four-level commercial office building, together with basement parking for 101 vehicles, plus limited at-grade on-site spaces; all constructed in approximately 2008. The property has a 4.5-Star NABERS Energy Rating.
The Property is fully let to the NSW State Government until June 2028. The lease is a net lease, with the rent subject to biennial market reviews protected by a ‘ratchet’, with increases over the previous rent capped at 8%.
The Fund acquired the asset from a related party, a wholly owned subsidiary of the Cromwell Diversified Property Trust. All negotiations were carried out on arm’s length terms however Cromwell elected to still charge the new trust an acquisition fee (discounted by 50%) despite the existing knowledge the group held on the asset.
The Property has a Weighted Average Lease Expiry (WALE) of 8.5 years, and after acquisition the Fund’s overall WALE will be 8.0 years.
Fully leased to the NSW State Government, 11 Farrer Place brings greater stability to the Fund’s income and tenancy profile. The acquisition is accretive to Fund earnings and takes the Fund’s direct property portfolio to $334.7 million and the look-through property exposure to 11 assets, with a total investment value of $436.7 million.
The acquisition settled on 31 October 2019.