$91m sale continues Perth office fightback
Growthpoint Properties has snapped up an A-grade Perth office building from the Investa Office Fund for $91.325 million, a clear increase on the property’s recent valuation.
The sale is a 20% premium to the December 2017 book value and a 2.5% increase on its May 2018 valuation, in a deal that could put pressure on US private equity giant Blackstone to lift its $3.1 billion takeover offer for IOF.
IOF said the sale of 836 Wellington St, which is fully leased to the federal government’s Department of Home Affairs, was in line with its strategy to focus on core CBD assets.
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“IOF has been able to take advantage of strong demand for assets with long lease terms and high-quality covenants to crystallise value for unitholders,” IOF fund manager Penny Ransom says.
Agents on the deal were Knight Frank’s Ben Schubert, Todd Schaffer and Neil Brookes.
The sale was struck on a net passing yield of 5.6% and a market cap rate of 6.25%, in a Perth market affected by the end of the resources boom.
The purchase is Growthpoint’s first office investment in Perth, managing director Timothy Collyer said. “Signs of improvement in the Western Australian economy give us confidence that the recovery in Perth is under way,” Collyer says.
“The removal of substantial subleasing from the market over the past 12-18 months, along with a period of subdued development, give us confidence that the timing of this transaction will closely meet the bottom of Perth’s office-leasing market.”
Growthpoint offered guidance of fiscal 2019 funds from operations of at least 24.6c per stapled security and distributions of 23c per stapled security.
This article originally appeared on www.theaustralian.com.au/property.
